EMCOR
EME
$776.62
-1.37%
EMCOR Group, Inc. is a leading specialty contractor in the United States, providing electrical and mechanical construction, facilities services, building services, and industrial services to a diverse customer base across commercial, technology, manufacturing, healthcare, and institutional sectors. With approximately 100 operating subsidiaries and 44,000 employees, EMCOR holds a dominant position in the fragmented U.S. engineering and construction industry, differentiating itself through scale, national reach, and a comprehensive service offering. The current investor narrative centers on robust revenue growth driven by data center and technology infrastructure demand, alongside concerns about margin sustainability and the impact of recent market volatility on the stock's valuation.…
EME
EMCOR
$776.62
Related headlines
Investment Opinion: Should I buy EME Today?
Based on the analysis, EME is rated a Buy. The thesis is that EMCOR's robust revenue growth, exceptional profitability, and strong balance sheet justify a premium valuation, with analyst targets implying 33.1% upside. The consensus rating is Buy with an average target of $1,033.29, and the PEG ratio of 0.71 indicates undervaluation relative to growth.
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EME 12-Month Price Forecast
The AI assessment is bullish, driven by strong growth, high profitability, and attractive valuation on a PEG basis. However, confidence is medium due to margin pressure and valuation premium. The stance would be upgraded to high confidence if margins expand and the stock pulls back to a PE below 20x, or downgraded if revenue growth slows or margins deteriorate.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on EMCOR's 12-month outlook, with a consensus price target around $1033.29 and implied upside of +33.0% versus the current price.
Average Target
$1033.29
0 analysts
Implied Upside
+33.0%
vs. current price
Analyst Count
—
covering this stock
Price Range
$885 - $1200
Analyst target range
EMCOR has coverage from 7 analysts, with a consensus recommendation of 'Buy' (mean rating of 1.6 on a 1-5 scale). The average price target is $1,033.29, implying a 33.1% upside from the current price of $776.62. The distribution is bullish, with no sell ratings and a majority of buy/overweight ratings. The target range spans from $885.00 (low) to $1,200.00 (high), with the high target suggesting a 54.5% upside, likely assuming continued growth in data center and infrastructure spending. The low target still implies a 14.0% upside, indicating analysts see limited downside risk. Recent ratings actions have been positive, with Cantor Fitzgerald reiterating 'Overweight' in June 2026 and UBS maintaining 'Buy' in March 2026, reflecting confidence in the company's growth trajectory. The relatively narrow spread between low and high targets (36% difference) suggests moderate conviction among analysts, though the wide range also highlights uncertainty around margin sustainability and market cyclicality.
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Bulls vs Bears: EME Investment Factors
EMCOR presents a compelling growth story with robust revenue acceleration, exceptional profitability, and a strong balance sheet, but faces near-term margin pressure and a valuation that is not cheap. The bull case is supported by accelerating growth, high ROE, and analyst optimism, while the bear case highlights margin compression, valuation risk, and cyclicality. Currently, the bull case has stronger evidence given the PEG ratio and analyst targets, but the key tension is whether margin sustainability can justify the premium valuation. If margins hold or improve, the stock likely re-rates higher; if they deteriorate, the stock could face significant de-rating.
Bullish
- Strong Revenue Growth: Q1 2026 revenue grew 19.7% YoY to $4.63B, accelerating from 16.4% in Q1 2025, driven by robust demand in mechanical and electrical construction, particularly data center and technology infrastructure projects.
- High Profitability and ROE: ROE stands at 34.6%, far exceeding the industry average of 8.6%, and net margin improved to 6.6% in Q1 2026, reflecting strong operational efficiency and capital allocation.
- Undervalued on PEG: With a PEG ratio of 0.71, the stock trades at a discount to its growth rate, suggesting the market is pricing in conservative expectations despite strong fundamentals.
- Healthy Balance Sheet: Debt-to-equity is only 0.23, and the current ratio is 1.22, providing ample liquidity and financial flexibility to fund growth initiatives and weather economic downturns.
Bearish
- Margin Pressure: Operating margin dipped to 8.7% in Q1 2026 from 8.2% in Q1 2025, indicating rising costs or project mix shifts that could compress profitability if not managed.
- High Valuation Premium: Trailing PE of 21.7x is above the industry average of 18.5x and near the high end of its 5-year range (12.9x-26.9x), leaving limited room for multiple expansion and increasing downside risk if growth slows.
- Recent Price Volatility: The stock has pulled back 18.4% from its 52-week high of $951.96, and the 3-month price change is -8.5%, indicating investor uncertainty and potential for further downside.
- Negative Free Cash Flow in Q1: Despite $1.08B in TTM FCF, Q1 2026 saw negative free cash flow due to working capital swings, which could signal cash flow volatility and strain on liquidity if sustained.
EME Technical Analysis
EMCOR's stock has exhibited a strong long-term uptrend, with a 1-year price change of +27.1%, significantly outperforming the S&P 500's +20.5% over the same period. However, the current price of $776.62 sits at 62.5% of the 52-week range (between $564.92 low and $951.96 high), indicating a notable pullback from the highs. This positioning suggests the stock is in a corrective phase after a strong rally, potentially offering a value opportunity if the underlying fundamentals remain intact, but also carrying risk of further downside if the trend breaks.
Beta
1.15
1.15x market volatility
Max Drawdown
-28.7%
Largest decline past year
52-Week Range
$565-$952
Price range past year
Annual Return
+27.1%
Cumulative gain past year
| Period | EME Return | S&P 500 |
|---|---|---|
| 1m | +2.8% | +3.6% |
| 3m | -8.5% | +2.7% |
| 6m | -4.5% | +11.4% |
| 1y | +27.1% | +18.7% |
| ytd | +21.6% | +12.3% |
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EME Fundamental Analysis
EMCOR's revenue growth has been robust, with the most recent quarter (Q1 2026) reporting revenue of $4.63 billion, a 19.7% year-over-year increase, accelerating from the 16.4% growth seen in Q1 2025. This growth is driven by strong demand in the U.S. mechanical construction segment, which contributed $8.56 billion in annual revenue, and the electrical segment at $5.61 billion. The company's profitability is solid, with a gross margin of 18.7% in Q1 2026, up from 18.7% in the prior year, and a net margin of 6.6%, reflecting stable operating leverage. However, operating margin dipped to 8.7% from 8.2% in Q1 2025, indicating some cost pressures. EMCOR maintains a healthy balance sheet with a debt-to-equity ratio of 0.23, a current ratio of 1.22, and generated $1.08 billion in trailing twelve-month free cash flow, though Q1 2026 saw negative free cash flow due to working capital swings. The company's ROE of 34.6% and ROA of 12.0% demonstrate strong capital efficiency, and its low payout ratio of 3.5% suggests ample room for reinvestment or shareholder returns.
Quarterly Revenue
$4.6B
2026-03
Revenue YoY Growth
+19.7%
YoY Comparison
Gross Margin
18.7%
Latest Quarter
Free Cash Flow
$1.1B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is EME Overvalued?
Given EMCOR's positive net income, the price-to-earnings (PE) ratio is the primary valuation metric. The trailing PE is 21.7x, while the forward PE is 21.1x, indicating a modest premium for expected growth. The PEG ratio of 0.71 suggests the stock is undervalued relative to its growth rate, implying the market may be pricing in conservative expectations. Compared to the industry average PE of 18.5x (based on historical data), EMCOR trades at a 17% premium, which is justified by its superior ROE of 34.6% versus the industry's 8.6% and its strong revenue growth. Historically, EMCOR's PE has ranged from 12.9x to 26.9x over the past five years, with the current 21.7x sitting near the higher end, indicating the market is pricing in optimistic growth prospects. The PS ratio of 1.62 is also above the historical average of 2.5x, but this is supported by the company's expanding margins and market position.
PE
21.7x
Latest Quarter
vs. Historical
High-End
5-Year PE Range 12x~21x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
13.7x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks include margin pressure, as operating margin dipped to 8.7% in Q1 2026 from 8.2% in Q1 2025, and negative free cash flow in Q1 due to working capital swings, which could signal cash flow volatility. The company's high ROE of 34.6% is impressive but may be unsustainable if growth decelerates, and the low payout ratio of 3.5% suggests limited dividend support for shareholders. Debt-to-equity is low at 0.23, but the current ratio of 1.22 is modest, indicating potential liquidity constraints in a downturn.
FAQ
Key risks include margin compression (operating margin dipped to 8.7% in Q1 2026), valuation de-rating if growth slows, and cyclicality in construction spending. The stock's beta of 1.147 amplifies market volatility, and negative free cash flow in Q1 highlights potential cash flow swings. Additionally, concentration in data center and infrastructure projects exposes it to sector-specific downturns. The most severe risk is a recession leading to project cancellations, which could drive the stock down 27% to its 52-week low.
The 12-month forecast is bullish, with a base case target of $1,033 (33.1% upside) and a bull case target of $1,200 (54.5% upside), based on analyst estimates. The bear case target is $885 (14% upside) or lower, with a 20% probability. The most likely scenario is the base case, assuming revenue growth remains strong and margins stabilize. Analysts have a consensus Buy rating, and recent actions have been positive.
EME trades at a trailing PE of 21.7x, a 17% premium to the industry average of 18.5x, but this is justified by its superior ROE of 34.6% and revenue growth of 19.7%. The PEG ratio of 0.71 suggests the stock is undervalued relative to its growth rate. Historically, the PE has ranged from 12.9x to 26.9x, so the current level is near the higher end, indicating the market expects continued strong growth. Overall, the stock is fairly valued, with a slight premium for quality.
EME is a good buy for investors seeking growth with a reasonable valuation, as evidenced by a PEG ratio of 0.71 and analyst upside of 33.1%. However, the stock is not cheap on a PE basis (21.7x trailing), and margin pressure poses a risk. It is best suited for those with a 12-month horizon who can tolerate volatility. For value investors, waiting for a pullback to a PE below 18x would improve the risk/reward.
EME is suitable for long-term investment (3-5 years) given its strong growth trajectory, high ROE, and low debt. The stock's beta of 1.147 indicates higher volatility, making it less suitable for short-term trading unless one can time the market. The low dividend yield of 0.16% means income investors should look elsewhere. For long-term investors, the PEG ratio of 0.71 suggests the stock is undervalued, and the company's position in data center construction provides a secular tailwind. A minimum holding period of 3 years is recommended to ride out cyclicality.
