IES Holdings, Inc. (IESC): what the price assumes

In the published model solve dated 2026-Q2, anchored at $495.88, IES Holdings, Inc. (IESC) is priced for +30.8% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-27.

Generated: 2026-07-29 · Exported: 2026-08-01 · Source: https://boothcheck.com/report/IESC

Headline

FieldValue
TickerIESC
CompanyIES Holdings, Inc.
Current price$495.89/sh
CompositionCommunications 34% / Residential - Single-family Electrical 20% / Residential - Single-family Plumbing & HVAC 10% / Residential - Multi-family and Other 9% / Infrastructure Solutions - Industrial Services 3% / Infrastructure Solutions - Custom Engineered Solutions 12% / Commercial & Industrial 13%

What The Price Assumes (Inversion)

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

FieldValue
Inversion basiswhole-company
Operating margin (value-band context)3.8%
Operating margin today11.7%
Margin compression (value-band)-7.9pp
Implied growth30.8%
Multiple paid22x operating income

The operating-margin figure is value-band context at year 9: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 11.4% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~5.9pp.

Reconcile: at the x-ray's 9.3% required return this reads ~18.1%/yr; the models below use their own rates.

How unusual the bet is: elevated

ReferenceValue
vs own history-0.55σ
cohort percentile (of 222 peers)55
sustained it ~5 years at this level23%
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
Asset2.45x5expensive
Earnings3.96x5expensive
Relative1.10x5expensive
Growth0.98x3justifies

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 9.2%); the inversion above states its own rate.

Per-Model Detail (n=18)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$436.521.14xyesFCF base $0.3B, growth 16% (input: historical growth), terminal g 4.0%, WACC 9.2%, 6yr projection
DCF Exit MultipleGrowth$592.140.84xyesExit EV/EBITDA: 19.0x / 21.0x / 23.0x (bear / base = today's held flat / bull), 6yr
Relative ValuationRelative$368.691.34xyesP/E 18x (static sector reference · 2026-04), scenarios: 14.7x / 18.0x / 21.3x (bear / base = reference held flat / bull), EV/EBITDA 14.71x
Simple DDMGrowthno
Two-Stage DDMGrowthno
Simple Excess ReturnAsset$202.322.45xyesBV/sh $52.91, ROE (TTM) 35.4%, ke 9.3%
Two-Stage Excess ReturnAsset$423.681.17xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$503.760.98xyesRev $3.6B, growth 16% (input: historical growth; tapered), Terminal P/S: 2.2x / 2.8x / 3.3x (bear / base = today's held flat / bull, cap 12x)
Peter Lynch Fair ValueRelative$656.250.76xyesEPS $18.75, growth 35% (input: historical EPS growth), PEG=0.76 (Undervalued)
Margin TrajectoryGrowthno
Earnings Power ValueEarnings$96.405.14xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.23B × (1−21%) / WACC 9.2% → EPV (no growth)
Residual IncomeAsset$315.691.57xyesBV $52.91 + 5yr PV of (ROE (TTM) 35.4% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham NumberAsset$149.413.32xyes√(22.5 × EPS $18.75 × BVPS $52.91) — Graham's conservative floor
EV/EBITDA RelativeRelative$281.761.76xyesEBITDA $0.48B × sector EV/EBITDA 12.0x
FCF YieldEarnings$125.323.96xyesFCF $239.4M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$117.204.23xyesSBC-adj FCF $0.22B (FCF $0.24B − SBC $0.02B) capitalized at Kₑ
Ben Graham FormulaEarnings$605.000.82xyesEPS $18.75 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$45.4410.91xyesBV $52.91 × (ROIC 7.9% / WACC 9.2%)
P/Sales SectorRelative$449.961.10xyesRevenue $3.63B × sector P/S 2.5x
PEG Fair ValueRelative$703.120.71xyesEPS $18.75 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings YieldEarnings$202.702.45xyesEPS $18.75 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelativeno
Clinical Phase NPVGrowthno
MertonAssetno
V5 Mechanicalno

Solvency

FieldValue
Net cash$223.4m
Net debt / NOPAT (after-tax)-0.66x (net cash)
Net debt / operating income (pre-tax)-0.52x (net cash)
Interest coverage140.8x
Share count CAGR (buyback)-0.7%
Burning cashno

Bullet Takeaways

Bull Case

Start with what management does with the cash, because it tells you how they see the business. The share count has drifted lower, falling about 0.7% a year, so the company is retiring stock rather than issuing it. There is no dividend. Net cash sits at roughly $223 million against gross debt of only $39 million, and interest is covered well over a hundred times by operating profit. That is a balance sheet built to fund acquisitions and buybacks out of its own cash flow, and management has used it that way: the company closed the Gulf Island acquisition for about $143 million in January 2026, folding capacity into the infrastructure side without leaning on lenders. Cash generated by the business goes back into the business or back to holders, not to servicing debt.

The operating story underneath that capital discipline is the data-center build-out. IES groups several skilled-trade contractors under one roof, and the Communications segment, about a third of revenue, installs the electrical and network backbone that hyperscale data centers run on. Revenue grew 17% in the March 2026 quarter and operating income rose 21%, with diluted EPS of $5.44. The demand is not a one-quarter blip: the company reported backlog near $3.9 billion, up 62% since the prior fiscal year-end, with conversion expected to extend beyond fiscal 2026. The peers confirm the wave is real and durable. Comfort Systems describes demand that "has been especially strong in the technology sector, particularly for data centers", with same-store revenue lifted by "an increase in activity in the technology sector at our Texas electrical operation ($649.3 million)". When the largest mechanical and electrical contractors in the country are all pointing at the same end market, a smaller specialist riding the same trend has a long runway in front of it.

The returns the business earns are the reason the price is where it is. Trailing return on equity runs above 35%, and the company turns each dollar of capital into far more operating profit than its book value would suggest, which is why the asset-based valuation methods anchored to book value land so far below the price. A contractor that compounds book value at that rate while buying back stock and acquiring complementary operations is doing the two things that build per-share value at once. The bull case is that the data-center cycle keeps the top line growing while management keeps the cash working, and the combination earns the multiple the market has put on it.

Bear Case

The bear case begins with the question every cyclical contractor eventually has to answer: are these peak earnings or sustainable earnings? IES is riding a construction wave concentrated in one end market. The Communications segment, the engine of the recent growth, is leveraged to data-center spending, and that spending is itself a function of a hyperscaler capital-expenditure cycle that has run hot for two years. Backlog up 62% in a single fiscal year is the kind of number that flatters a stock at the top of a cycle and haunts it at the bottom. The order book that looks like visibility on the way up becomes a cancellation risk if the customers building those data centers slow their commitments. Demand cycles in construction do not fade gently; they turn, and a contractor's revenue turns with them.

That cyclical exposure runs straight into the price. At today's quote the market is paying about 33 times operating income, which embeds company-wide growth held near its self-funding ceiling for roughly seven years. Only about one in six comparable fast-growers has sustained that pace for that long. The valuation methods say the same thing from a different angle. Earnings-power and peer-multiple frames put fair value at a fraction of the price, asset-based methods anchored to the company's book value land lower still, and only the growth-driven discounted cash-flow approach, the one method that extrapolates the recent pace forward, reaches the current level. When a single family of methods, the one most dependent on the cycle continuing, is the only one that justifies the price, the price is a bet that the cycle does not break. If operating growth mean-reverts toward something more ordinary, the multiple the market is paying compresses toward where the other methods sit, and the de-rating does the damage even if revenue holds.

Customer and end-market concentration sharpens the point. The same data-center demand driving the upside is a narrow base to lean a thirty-three-times multiple on. The peer disclosures show how end-market mix swings results: EMCOR's building-services revenue moved on "the completion or substantial completion of several tenant fit-out or office projects, and... fewer active warehousing and distribution projects for some of our e-commerce customers during the year." Project-based contracting revenue arrives in lumps and leaves in lumps. IES has a clean balance sheet, so this is not a solvency bear; net cash and triple-digit interest coverage mean the company survives a downturn comfortably. The bear case is about the price, not the business. A strong company bought at a price that requires the best end market in construction to stay hot for the better part of a decade can still be a poor investment if that requirement is not met.

Valuation

Strip the price down to what it assumes. At about $712 (June 27, 2026) the market is valuing IES at roughly 33 times its operating income, and inverting that price says the company has to compound operating profit near its self-funding ceiling for about seven years to support it. The pace itself is not exotic; it is within what IES has recently delivered. The stretch is in the duration. Of fast-growers that have hit this rate, only about 16% kept it up for the six to seven years the price needs. The bet is less about whether IES can grow and more about how long the data-center cycle lets it.

The methods we use to triangulate disagree in a revealing pattern. Earnings-power approaches such as capitalized free cash flow and the zero-growth earnings anchor put value far below the price. Peer-multiple approaches land below it too. Asset-based methods built off book value, where book value per share is about $53 against return on equity above 35%, sit lowest of all, because a contractor earning multiples of its book value will always look expensive to a method that values the book. Only the growth-driven discounted cash-flow method, which carries the recent 16% growth forward, reaches today's price. When the single family that credits forward growth is the only one that gets there, the premium is a durability bet: the static frames structurally cannot price a moat that depends on the cycle persisting, so the gap between them and the price is the optionality the market is paying for. The peer cohort, the large mechanical and electrical contractors that share IES's end markets, are priced on the same data-center thesis, so IES is not an outlier within its group so much as a smaller participant in a richly valued cohort.

The balance sheet removes solvency from the downside calculus entirely. IES holds about $223 million of net cash against $39 million of gross debt, operating profit covers interest more than 140 times over, and the share count has been falling rather than rising. There is no leverage to amplify a downturn and no dilution eating into per-share value. What bounds the downside here is not a fragile balance sheet but the distance between the price and where the cycle-independent methods land. The buyer at today's price owns a well-run, debt-light contractor whose value rests on the data-center build-out lasting most of a decade.

Catalysts

The most recent print set the tone. For the quarter ended March 31, 2026, IES reported revenue of $974.0 million, up 17% year over year, operating income of $112.3 million, up 21%, and net income attributable to IES of $109.9 million, up 56%, with diluted EPS of $5.44. The driver was the Communications segment, where data-center demand lifted revenue, and the headline figure for the bulls was backlog: about $3.9 billion, up 62% since the fiscal 2025 year-end, with remaining performance obligations near $2.3 billion. Management noted that conversion of this backlog to revenue is expected to extend beyond fiscal 2026, which is the visibility the growth thesis runs on.

Two developments feed the order book directly. The Communications backlog had already grown over 90% in fiscal 2025 versus the prior year, and in January 2026 the company closed the Gulf Island acquisition for about $143.1 million net of cash, adding infrastructure capacity. The next earnings release is the event to watch, because it shows whether backlog keeps building or starts to plateau. With the entire thesis resting on the durability of data-center construction spending, the quarter-to-quarter backlog trend is the single most informative number the company reports.

Peer Cohorts (Per Segment, With Filing Citations)

Communications (reported)

Residential (reported)

Infrastructure Solutions (reported)

Commercial & Industrial (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.

Sources

IES fiscal Q2 2026 press release, 8-K · IES fiscal 2025 results, 8-K

View the full interactive IESC report on boothcheck