EMCOR Group

EMCOR Group Inc is assigned a 3-star quantitative star rating, reflecting our opinion that this share class is a balanced choice, but prudent investors should consider looking elsewhere. The stock currently trades at a price consistent with our quantitative fair value estimate, which has a medium uncertainty rating.

The firm's valuation metrics undermine our fair value estimate. A company's valuation metrics provide insights into the market's expectations for its future growth and profitability. Reflecting the firm's valuation is its book value yield of 12.1%, which falls in the bottom 20% compared with global peers. The market value of this company's shares looks expensive relative to the book (accounting) value of equity, which contributes to our balanced fair value estimate.

Conversely, the company's solid growth is reassuring. Consistent revenue and earnings growth indicates a company's potential for increased market share and profitability. The firm's EBIT 3-year growth of 39.4%, for example, lies in the top 20% compared with global peers. Earnings before interest and taxes growth over the past three years has proved robust, bolstering the long-term value of the business. This characteristic further promotes our neutral price/fair value ratio.

In addition to the aforementioned drivers, our model considers momentum as part of its comprehensive analysis. This share class has outperformed the broader universe over the past year. While we believe the stock is fairly-valued, this outperformance had a negative impact on our valuation estimate.

The company's narrow economic moat rating suggests it should be able to maintain robust profitability for a decade or longer before competition erodes its advantage. In addition, the company's moderate financial health score is decent and doesn't seriously concern us with regard to financial distress.