EMCOR Group, Inc. (EME): what the price requires

At today's price, EMCOR Group, Inc. (EME) is priced for +22.9% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/EME

Headline

FieldValue
TickerEME
CompanyEMCOR Group, Inc.
Current price$763.96/sh
CompositionUnited States electrical construction and facilities services 30% / United States mechanical construction and facilities services 42% / United States building services 18% / United States industrial services 7% / United Kingdom building services 3%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed2.9%
Operating margin today9.0%
Margin compression implied-6.1pp
Implied growth22.9%
Multiple paid22x operating income

The operating-margin requirement is derived from the framework's value band at year 10, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 10.1% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~6.2pp.

How unusual the bet is: elevated

ReferenceValue
vs own history+0.39σ
cohort percentile (of 225 peers)51
sustained it ~5 years at this level33%
implied end-window share0%

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset2.36x5expensive
Earnings2.70x4expensive
Relative0.83x5justifies
Growth0.93x3justifies

Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.0%); the inversion above states its own rate.

Per-Model Detail (n=17)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$805.600.95xyesFCF base $1.2B, growth 18% (input: historical growth), terminal g 4.0%, WACC 9.0%, 6yr projection
DCF Exit MultipleGrowth$935.390.82xyesExit EV/EBITDA: 16.5x / 18.5x / 20.5x (bear / base = today's held flat / bull), 6yr
Relative ValuationRelative$605.741.26xyesP/E 18x (static sector reference · 2026-04), scenarios: 14.7x / 18.0x / 21.3x (bear / base = reference held flat / bull), EV/EBITDA 13.95x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$323.602.36xyesBV/sh $86.52, ROE (TTM) 34.6%, ke 9.3%
Two-Stage Excess ReturnAsset$666.321.15xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$822.770.93xyesRev $17.7B, growth 18% (input: historical growth; tapered), Terminal P/S: 1.6x / 1.9x / 2.3x (bear / base = today's held flat / bull, cap 12x)
Peter Lynch Fair ValueRelative$925.320.83xyesEPS $29.77, growth 31% (input: historical EPS growth), PEG=0.82 (Undervalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$187.154.08xyesNormalized EBIT (5y avg op income, one-time charges added back) $1.06B × (1−26%) / WACC 9.0% → EPV (no growth)
Residual IncomeAsset$503.491.52xyesBV $86.52 + 5yr PV of (ROE (TTM) 34.6% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham NumberAsset$240.743.17xyes√(22.5 × EPS $29.77 × BVPS $86.52) — Graham's conservative floor
EV/EBITDA RelativeRelative$492.551.55xyesEBITDA $1.87B × sector EV/EBITDA 12.0x
FCF YieldEarnings$251.753.03xyesFCF $1078.8M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings$960.580.80xyesEPS $29.77 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$67.2611.36xyesBV $86.52 × (ROIC 7.0% / WACC 9.0%)
P/Sales SectorRelative$992.860.77xyesRevenue $17.75B × sector P/S 2.5x
PEG Fair ValueRelative$1116.380.68xyesEPS $29.77 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings YieldEarnings$321.842.37xyesEPS $29.77 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net cash$653.9m
Net debt / NOPAT (after-tax)-0.57x (net cash)
Net debt / operating income (pre-tax)-0.42x (net cash)
Share count CAGR (buyback)-4.1%
Burning cashno

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

Bull Case

The market is pricing EMCOR as a cyclical contractor near the top of a building cycle, and the fundamentals say it is something closer to a structurally advantaged electrification and data-center play. Start with what the price implies: operating growth around 25.8 percent against a current operating margin of about 10.1 percent. That looks demanding until you read the order book. Remaining performance obligations hit a record $15.62 billion at the end of the first quarter, up 32.9 percent year over year, which is contracted future work, not a pipeline of hopes. EMCOR's filings describe revenue recognized over time as it progresses toward satisfying these obligations across construction and service contracts (EME FY2025 10-K, accession 0000105634-26-000025), so a backlog growing a third faster than revenue is the clearest evidence that the demand the price assumes is already booked.

The first quarter showed the operating leverage that backlog converts into. Revenue rose 19.7 percent to a record $4.63 billion, organic growth ran 16.8 percent, and diluted EPS of $6.84 climbed 30 percent and beat the $5.90 estimate by nearly 15 percent. Management raised full-year guidance to revenue of $18.50 billion to $19.25 billion and EPS of $28.25 to $29.75. The drivers are secular: network and communications projects including data centers, plus institutional, health care, manufacturing, and water and wastewater. The mechanical and electrical construction segments, together about 72 percent of the company, are precisely the trades that build power-dense computing facilities, and that demand is in early innings rather than late cycle.

The returns and capital structure are what separate EMCOR from a typical contractor. Trailing return on equity is about 34.6 percent, the company carries roughly $654 million of net cash with only $262 million of gross debt, and it has been retiring shares at about 4 percent a year, repurchasing roughly $600 million of stock in 2025 under a $3.65 billion authorization. It raised the dividend 60 percent to $0.40 and still funded the $865 million Miller Electric acquisition entirely in cash. On a Peter Lynch basis the stock screens undervalued at a PEG near 0.90, and the inversion midpoint near $731 sits below the price only because the growth rate the order book supports is itself extraordinary. The bull case is that the market is applying a cyclical discount to a business with a record backlog, fortress balance sheet, and best-in-class capital allocation.

Bear Case

The bear case lives in how EMCOR deploys capital, not because management is careless but because the strategy is a roll-up running at full throttle into a hot market. The company just made its largest-ever acquisition, Miller Electric for $865 million in cash, alongside nine other deals, and acquiring electrical contractors at the top of a data-center boom means paying current multiples for businesses whose margins reflect peak demand. The filing notes the $3.65 billion repurchase authorization and roughly 1.4 million shares retired in 2025 for about $600 million (EME FY2025 10-K, accession 0000105634-26-000025), which is shareholder-friendly when the stock is cheap, but buying back shares near record highs while also paying up for acquisitions concentrates the bet on demand staying strong. If construction activity rolls over, EMCOR will have deployed capital at the cycle's peak on both fronts.

The valuation is the second pressure. The price embeds operating growth near 25.8 percent, which is far above the company's long-run average and assumes the data-center buildout does not slow. The static valuation frames flag the stretch: earnings power value lands near $187 on normalized EBIT, the simple excess-return model near $324, and the Graham number near $241, all far below the price. These methods read EMCOR as expensive on assets and on normalized earnings power, and only the growth-DCF and relative-multiple families reach the current level. The company's own current operating margin of about 10.1 percent versus the roughly 3.1 percent margin the price implies over a long horizon shows how much the market is leaning on growth rather than profitability to justify the multiple.

The third issue is the inherent fragility of a project-based business at peak. Backlog is contracted, but it converts on customer schedules that can slip, and a single demand category, network and communications, is now the principal growth driver. Concentration in data-center work means EMCOR's order book is exposed to the capital-spending decisions of a handful of hyperscale customers; if that spending pauses, the 32.9 percent backlog growth reverses fast. EPS growth of 30 percent on 19.7 percent revenue growth is operating leverage that works both ways, magnifying earnings on the way up and on the way down. The price has already paid for the up case, and the share count, while shrinking, is being reduced at prices that assume the boom persists.

Valuation

The inversion frames the central tension. At $834.64 (June 27, 2026) the price embeds whole-company operating growth around 25.8 percent against a current operating margin near 10.1 percent, computed at a 10.1 percent cost of capital where each percentage point of growth moves the implied value about $6.38. That is an elevated assumption, well above EMCOR's long-run growth, and the rarity read confirms it sits at the demanding end without being extreme.

The X-ray splits cleanly between growth and static methods, and here the growth methods are credible because the backlog is real. The relative-valuation read at about $669 on a blended 21 times P/E is close. The static frames are far below: earnings power value near $187, the FCF-yield perpetuity near $252, and the Graham number near $241, because they ignore the growth the order book has already locked in.

The synthesis is that this is a growth premium with unusually strong evidence behind it. The deciding question is not whether EMCOR is a good business, the 34.6 percent ROE, net-cash balance sheet, and record backlog answer that, but whether 25.8 percent implied operating growth is sustainable. The backlog growing 32.9 percent supports the near-term path; the multi-year durability is the bet. Pay up if you believe the electrification and data-center demand cycle has years left to run; the static valuation floor in the low-to-mid hundreds is what the price would revert toward if that growth stalls.

Catalysts

The first-quarter 2026 report was the most recent and most important catalyst. Record revenue of $4.63 billion rose 19.7 percent with 16.8 percent organic growth, diluted EPS of $6.84 climbed 30 percent and beat the $5.90 estimate by nearly 15 percent, and operating income reached $404 million at an 8.7 percent margin. Management raised full-year guidance to revenue of $18.50 billion to $19.25 billion and EPS of $28.25 to $29.75. The single most-watched figure is the backlog: record remaining performance obligations of $15.62 billion, up 32.9 percent year over year, with data center, institutional, health care, manufacturing, and water projects all contributing. The next quarterly print is the test of whether that backlog keeps building or begins to plateau.

Capital allocation is the recurring catalyst. EMCOR raised its quarterly dividend 60 percent to $0.40, added $500 million to a repurchase authorization that totals $3.65 billion, repurchased roughly $600 million of stock in 2025, and completed the $865 million Miller Electric acquisition along with nine smaller deals. Watch for continued buyback pace, further bolt-on acquisitions in electrical and mechanical contracting, and any commentary on data-center demand durability, since network and communications projects are now the principal growth driver and the chief swing factor for the order book.

Sources: StockTitan EME Q1 2026 results, Tickeron EME Q1 2026 recap, StockTitan dividend and buyback, Investing.com buyback expansion.

Peer Cohorts (Per Segment, With Filing Citations)

United States electrical construction and facilities services (reported)

United States mechanical construction and facilities services (reported)

United States building services (reported)

United States industrial services (reported)

United Kingdom building services (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

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