COMFORT SYSTEMS USA INC (NYSE:FIX) – A Quality Stock Worth Considering

COMFORT SYSTEMS USA INC (NYSE:FIX) was identified by our Caviar Cruise screener as a potential candidate for quality investors. The company, which provides mechanical and electrical contracting services, stands out due to strong profitability, efficient capital allocation, and solid financial health. Below, we examine why FIX meets the criteria for a quality investment.

Key Strengths of FIX

• High Return on Invested Capital (ROIC) – FIX has an impressive ROIC (excluding cash and goodwill) of 109.45%, indicating exceptional efficiency in generating profits from its capital investments. This places it among the top performers in its industry.
• Strong EBIT Growth – The company has delivered a 35.75% annual EBIT growth over the past five years, reflecting improving operational profitability.
• Low Debt Burden – With a Debt-to-Free Cash Flow ratio of just 0.13, FIX could theoretically pay off all its debt in less than two months using its current cash flow. This demonstrates a conservative financial structure.
• High Profit Quality – FIX converts 139.51% of its net income into free cash flow, well above the 75% threshold for quality investments. This suggests earnings are backed by real cash generation rather than accounting adjustments.

Fundamental Analysis Summary

Our fundamental report assigns FIX an overall score of 8 out of 10, highlighting its strengths in profitability, growth, and financial health. Key takeaways include:

• Profitability: FIX outperforms 88-96% of its peers in metrics like Return on Assets (13.03%), Return on Equity (33.51%), and Operating Margin (11.20%).
• Growth: Revenue and earnings have grown at 21.86% and 36.79% annually over the past five years, respectively. Analysts expect continued EPS growth of 15.54% in the coming years.
• Valuation: While the P/E ratio of 28.28 appears high, it is reasonable relative to industry peers and justified by FIX’s strong growth and profitability.

Our Caviar Cruise screener lists more quality stocks and is updated regularly.

Disclaimer

This is not investing advice. The observations here are based on current data, but investors should conduct their own research before making decisions.