EMCOR Group Inc (EME)

Conclusion

EMCOR Group provides electrical and mechanical construction and facilities services, mainly in the United States and the United Kingdom. At 652.89 USD on 9 November 2026, the market capitalisation is 28.6 billion USD.

The verdict is fair, with a fair value band of 544.21 to 816.32 USD, a midpoint of 680.27 USD and a margin of safety of 4.2%. Today's P/E of 18.55 is below its ten-year median of 20.00, but EV/EBITDA of 11.82 is above its median of 11.25, and P/FCF of 19.29 is above 17.23. Price-to-sales (1.44 against 0.62) and price-to-book (6.69 against 2.71) are far above their medians. The DCF gives 777.23 USD per share at a discount rate of 10.7%, and the fair value from historical multiples is 583.31 USD. The reverse DCF implies growth of 8.8% a year, against 14.1% revenue growth and 14.0% free cash flow per share growth delivered over five years.

What holds the case up is a ROIC of 39.8% against a WACC of 10.5%, an Altman Z-score of 5.86 and free cash flow conversion of 96.2% over the trailing twelve months. What could break it is the price-to-book premium, a current ratio of 1.17, and a DCF in which the terminal value makes up 52.9% of the value.

Financial health

The financial strength is green, supported by net debt to EBITDA of -0.09 (a net cash position), interest coverage of 181.9 and an Altman Z-score of 5.86 in the safe zone. The current ratio of 1.17 and quick ratio of 1.04 are adequate, and debt to equity is 0.13. The Altman model was designed for manufacturers, so for a services contractor it is indicative only. Insolvency risk: low, about 0.6% by the estimate of the Ohlson model over one to two years. The balance sheet is conservatively financed, with little debt and a net cash position.

Earnings quality

Earnings quality is green, supported by a Piotroski score of 7 out of 9 and free cash flow conversion of 110.1% over five years. The accrual ratio is -0.3%, which indicates cash earnings are at least as strong as reported ones. Stock-based compensation is 0.1% of revenue, and free cash flow after it is 1.46 billion USD. The share count fell at a compound rate of 4.1% over five years, which points to buybacks. The company beat earnings estimates in all of the last eight quarters, by an average of 13.6%. Analysts raised estimates in the last 30 days, with seven upward revisions for next year and none downward. The Beneish M-score is not available.

Profitability

Profitability is green. Gross margin is 19.8% against a ten-year median of 15.0%, operating margin is 10.2% against 5.1%, and net margin is 7.8% against 3.6%. ROIC of 39.8% compares with a WACC of 10.5%, giving an ROIC minus WACC of 29.3%, and its five-year median is 32.5%. Return on equity of 36.0% is supported by asset turnover of 1.83 and a net margin of 7.5%, with an equity multiplier of 2.53 as of year-end 2025. Leverage adds some of the return, but the core driver is operating efficiency rather than debt.

Growth

Growth is green. Revenue compound growth is 15.3% over three years, 14.1% over five years and 9.7% over ten years. Earnings per share grew at 51.7% over three years, 63.8% over five years and 26.4% over ten years. Free cash flow per share grew at 43.4% over three years, 14.0% over five years and 21.9% over ten years. Revenue grew in nine of the ten comparable years. Analysts expect next year's earnings per share to grow by 15.9%.

Valuation

Valuation is yellow, held back by the premium on book value and sales. P/E is 18.55 against a ten-year median of 20.00, a discount of 7.3%. EV/EBITDA is 11.82 against 11.25, a premium of 5.0%, and P/FCF is 19.29 against 17.23, a premium of 11.9%. Price-to-sales is 1.44 against 0.62, and price-to-book is 6.69 against 2.71. The DCF gives 777.23 USD at a discount rate of 10.7%, with 52.9% of value in the terminal value. The fair value is an order-of-magnitude estimate built on fixed assumptions, not a price target. The reverse DCF implies 8.8% growth. The dividend yield is 0.2%, with a payout of 4.4% of free cash flow.

Risks

A weaker current ratio of 1.17 or a fall in free cash flow would reduce the cushion behind the balance sheet. The premium on price-to-book and price-to-sales means the valuation relies on continued high returns on capital. If growth slows below the 8.8% implied by the reverse DCF, the fair value band could move down. The DCF depends heavily on the terminal value, which makes up 52.9% of it. The Beneish M-score is not available. This analysis does not include a debt maturity schedule or revenue by segment, so it cannot judge refinancing risk or the mix of construction and facilities services.