Q1 Earnings Highlights: EMCOR (NYSE:EME) Vs The Rest Of The Engineering and Design Services Stocks

Yahoo

4 days ago

As the craze of earnings season draws to a close, here's a look back at some of the most exciting (and some less so) results from Q1. Today, we are looking at engineering and design services stocks, starting with EMCOR (NYSE:EME).
Companies providing engineering and design services boast ever-evolving technical expertise. Compared to their counterparts who manufacture and sell physical products, these companies can also pivot faster to more trending areas due to their smaller physical asset bases. Green energy and water conservation, for example, are current themes driving incremental demand in this space. On the other hand, those providing engineering and design services are at the whim of construction and infrastructure project volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates.
The 5 engineering and design services stocks we track reported a very strong Q1. As a group, revenues beat analysts' consensus estimates by 1.7% while next quarter's revenue guidance was in line.
Luckily, engineering and design services stocks have performed well with share prices up 14.1% on average since the latest earnings results.
Through its network of over 70 subsidiaries, EMCOR (NYSE:EME) provides electrical, mechanical, and building construction and services
EMCOR reported revenues of $3.87 billion, up 12.7% year on year. This print exceeded analysts' expectations by 2.2%. Overall, it was a very strong quarter for the company with a solid beat of analysts' EBITDA estimates.
Tony Guzzi, Chairman, President, and Chief Executive Officer of EMCOR, commented, 'Our first quarter results—which include 12.7% year-over-year revenue growth, a 22.6% increase in operating income, and $11.75 billion in remaining performance obligations—demonstrate the continued strength of our business. Once again, results were driven by our U.S. Electrical Construction and U.S. Mechanical Construction segments, which had year-over-year revenue growth of 42.3% and 10.2%, respectively, and operating margins of 12.5% and 11.9%, respectively. Our performance reflects our customers' confidence in our ability to execute complex projects across diverse end markets, as well as our proactive expansion into new geographies, and our productivity resulting from the use of virtual design and construction technologies and prefabrication capabilities. Coupled with sustained excellence in labor planning, large project coordination, and the sharing of best practices, we delivered exceptional results for our customers.'
EMCOR scored the fastest revenue growth but had the weakest full-year guidance update of the whole group. Unsurprisingly, the stock is up 13.8% since reporting and currently trades at $471.86.
Read why we think that EMCOR is one of the best engineering and design services stocks, our full report is free.
Involved in the construction of a major highway, the Grand Parkway in Houston, TX, Sterling Infrastructure (NASDAQ:STRL) provides civil infrastructure construction.
Sterling reported revenues of $430.9 million, down 2.1% year on year, outperforming analysts' expectations by 5.4%. The business had a stunning quarter with full-year EBITDA guidance exceeding analysts' expectations.
Sterling pulled off the highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 13.1% since reporting. It currently trades at $188.01.
Is now the time to buy Sterling? Access our full analysis of the earnings results here, it's free.
Founded in 1990 when a group of engineers from five companies decided to merge, AECOM (NYSE:ACM) provides various infrastructure consulting services.
AECOM reported revenues of $3.77 billion, down 4.4% year on year, falling short of analysts' expectations by 9.5%. It was a mixed quarter as it posted a decent beat of analysts' adjusted operating income estimates.
AECOM delivered the weakest performance against analyst estimates and slowest revenue growth in the group. Interestingly, the stock is up 7.8% since the results and currently trades at $110.15.
Read our full analysis of AECOM's results here.
Involved in the 1996 Olympic Games MasTec (NYSE:MTZ) is an infrastructure construction company that specializes in the telecommunications, energy, and utility industries.
MasTec reported revenues of $2.85 billion, up 6% year on year. This result beat analysts' expectations by 4.9%. Overall, it was a very strong quarter as it also put up an impressive beat of analysts' backlog estimates and a solid beat of analysts' EPS estimates.
The stock is up 16.9% since reporting and currently trades at $156.51.
Read our full, actionable report on MasTec here, it's free.
Working alongside some of the most popular mobile carriers in the world, Dycom (NYSE:DY) builds and maintains telecommunications infrastructure.
Dycom reported revenues of $1.26 billion, up 10.2% year on year. This print surpassed analysts' expectations by 5.7%. It was an exceptional quarter as it also produced an impressive beat of analysts' EPS estimates and a solid beat of analysts' EBITDA estimates.
Dycom scored the biggest analyst estimates beat among its peers. The stock is up 18.9% since reporting and currently trades at $229.92.
Read our full, actionable report on Dycom here, it's free.
The Fed's interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump's presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
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