Emcor stock initiated with buy rating at UBS on data center growth
Investing.com
Published Jun 13, 2025 05:17AM ET
UBS initiated coverage of EMCOR Group (NYSE:EME) with a buy rating and a $570 price target on Friday. The research firm cited strong earnings growth visibility through 2027 that it believes is not adequately reflected in the current stock price. With a market capitalization of $21.26 billion and a PEG ratio of 0.41, InvestingPro data suggests the stock is trading at an attractive valuation relative to its growth prospects.
UBS projects at least a 7% organic revenue compound annual growth rate from 2025-2027 for EMCOR's construction businesses, driven by structural investment in data centers, semiconductor fabrication facilities, and pharmaceutical plants. The firm expects an overall 6% growth rate for the company amid what it describes as an "otherwise modestly positive non-residential market." This outlook aligns with EMCOR's recent performance, as InvestingPro data shows revenue growth of 14.3% over the last twelve months, with the company maintaining strong financial health scores.
The research firm considers EMCOR's recently improved margin level of approximately 9% to be sustainable, supported by a mix of higher-margin large projects that have increased 16% from 2021-2024 and now represent more than 50% of the business. EMCOR's productivity investments and strong asset utilization also contribute to margin stability.
UBS's 2026 and 2027 earnings per share estimates exceed consensus by 7-10%, largely due to anticipated share buybacks. The firm expects continued strong free cash flow that will drive upside from capital allocation decisions.
EMCOR provides mechanical and electrical construction services, building services, and industrial services primarily in the United States and the United Kingdom, with particular strength in data center construction and maintenance. The company's strong market position is reflected in its impressive return on equity of 38% and EBITDA of $1.56 billion. For deeper insights into EMCOR's financial health and growth prospects, investors can access the comprehensive Pro Research Report available on InvestingPro , which includes detailed analysis and fair value estimates.
In other recent news, EMCOR Group, Inc. reported impressive financial results for the first quarter of 2025, surpassing Wall Street expectations. The company achieved an earnings per share (EPS) of $5.41, exceeding the forecast of $4.63, while revenue reached $3.87 billion, outpacing the anticipated $3.77 billion. Despite this strong performance, EMCOR's stock experienced a decline in pre-market trading. The company also raised its full-year EPS guidance to between $22.65 and $24.00, reflecting confidence in its ongoing operations. Additionally, EMCOR held its Annual Meeting of Stockholders, where the First Amendment to the Amended & Restated 2010 Incentive Plan was approved, extending its term until 2030. The meeting confirmed the re-election of nine directors, including Chairman, President, and CEO Anthony J. Guzzi. Furthermore, Ernst & Young LLP was ratified as EMCOR's independent auditor for 2025. These developments highlight EMCOR's continued focus on strategic growth and governance.
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Written By: Investing.com
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