EMCOR Group EME has delivered a remarkable 142.6% return over the past two years, demonstrating strong long-term performance. However, the stock has hit a rough patch recently, plummeting 15.2% year to date (YTD). The stock even performed below the broader Construction sector’s 9% decline and the S&P 500’s 4.7% decrease.

EME’s Share Performance

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Nonetheless, EME stock has performed somewhat better than the Zacks Building Products - Heavy Construction industry’s 15.7% decline so far this year. EMCOR stock has even outperformed its peers, including Quanta Services, Inc. PWR, Comfort Systems USA, Inc. FIX and Sterling Infrastructure, Inc. STRL.

Quanta, Comfort Systems and Sterling stocks have plunged 16.3%, 19.3% and 29.7%, respectively, so far this year.

What’s Impacting EMCOR?

EMCOR’s stock remains attractive due to strong secular growth trends. However, the recent selloff might be due to concerns over margin sustainability, with operating margins expected to decline slightly to 8.5%-9.2% in 2025 from 9.2% reported in 2024, indicating a normalization after strong growth.

In 2024, total revenues were up 15.8% to $14.57 billion. Now, the company expects 2025 revenues of $16.1 billion-$16.9 billion, with a midpoint of $16.5 billion. This represents approximately 13% growth in 2025, considering the mid-point, indicating slower revenue growth this year.

Again, investors have been weighed down by broader market volatility influenced by tariff threats and inflation concerns.

These challenges raise the question: Is EMCOR stock still worth buying after its stellar 2024 performance, or is it time to wait for a better entry point?

Let's have a look at the estimate revision trend that will replicate the analysts’ perception.

EME Stock’s Consensus Estimate Trend

Despite the above-mentioned headwinds, EMCOR has seen a notable increase in its earnings outlook, reflecting growing confidence in its future performance. Over the two months, analysts have revised EMCOR’s 2025 earnings per share (EPS) estimate upward from $22.24 to $23.37. This upward revision follows the company’s solid fourth-quarter 2024 results, reinforcing optimism about its ability to sustain momentum. (read more: EMCOR Q4 Earnings Surpass, Revenues Miss Estimates).

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EME Stock's Estimate Revision Trend

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Decoding EMCOR’s Tailwinds

EMCOR Exhibits Solid Financial Strength and Backlog Growth

EMCOR maintains strong financial stability, with cash and cash equivalents climbing to $1.34 billion from $790 million a year ago and working capital rising to $1.24 billion.

Additionally, Remaining Performance Obligations climbed 14.2% year over year to $10.1 billion, indicating a strong pipeline of future revenue. This backlog provides visibility into 2025 earnings and supports ongoing expansion efforts.

EMCOR’s Solid Demand in Key Sectors

One of EMCOR’s biggest growth drivers has been the surging demand in data centers, high-tech manufacturing, healthcare, and industrial construction. The company’s US Electrical Construction segment posted a strong 22% revenue increase in the fourth quarter of 2024, fueled by the ongoing AI-driven and hyperscale data center boom. Meanwhile, US Mechanical Construction revenue grew 12.8% year over year, supported by investment in semiconductor fabrication, healthcare infrastructure, and manufacturing facilities.

The trend of reshoring and nearshoring in the United States has further benefited EMCOR, as companies prioritize domestic production to mitigate supply chain risks. These factors have created a long-term runway for growth in energy retrofits, wastewater projects, and traditional manufacturing facilities.

EMCOR’s Strategic Acquisition of Miller Electric

A key development for EMCOR was its $865 million all-cash acquisition of Miller Electric Company, which closed in February 2025. This acquisition added approximately $805 million in expected 2024 revenues and $80 million in adjusted EBITDA. This acquisition strengthens EMCOR’s presence in high-growth sectors, including data centers (24% of Miller’s revenue), healthcare (23%), and industrial manufacturing (13%). The deal is expected to be modestly accretive to EPS in 2025, with further upside potential in the coming years.

EMCOR’s Stock Valuation

From a valuation perspective, EMCOR’s forward 12-month price-to-earnings (P/E) ratio of 16.12 is almost in line with the industry average of 16.11. The company’s five-year P/E range of 9.72 to 25.95, with a median of 16.72, suggests that the stock is trading near its fair value. This valuation suggests a compelling opportunity relative to peers such as Quanta (with a forward P/E of 25.03) and Comfort Systems (18.83). But EMCOR stock is trading slightly at a premium compared to its peer company, Sterling, which has a forward P/E of 13.94.

EMCOR’s P/E Ratio (Forward 12-Month) vs. Industry

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Should You Buy EMCOR Stock Now?

EMCOR is well-positioned for long-term growth, driven by strong earnings, a growing backlog, solid market demand, and strategic acquisitions. While external economic factors and margin pressures warrant some caution, the company’s proactive strategies reinforce its potential to create sustained value for investors.

Analysts remain bullish on EME stock, with three out of five rating it a "Strong Buy." The stock's average price target of $493.50 implies a 28.2% upside from its latest closing price.
 

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With a fair valuation and strong financial foundation, EMCOR presents a compelling opportunity for long-term investors. The stock currently holds a Zacks Rank #2 (Buy), reflecting continued analyst confidence in its future performance. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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