Comfort Systems USA Inc (FIX)

Conclusion

Comfort Systems USA, headquartered in Houston, installs, maintains, repairs and replaces mechanical and electrical systems for commercial, industrial and institutional buildings in the United States. At a price of 1113.23 USD on 2026-11-09, the market capitalisation is 39.2 billion USD.

The verdict is fair. The P/E of 24.0 is 18.3% above its ten-year median of 20.3, and EV/EBITDA of 16.5 is 33.0% above its median of 12.4, while P/FCF of 16.0 is 10.6% below its median of 18.0. The DCF gives 1603.40 USD per share at a discount rate of 13.11%. The fair value band runs from 981.09 to 1471.64 USD with a midpoint of 1226.36 USD, a margin of safety of 10.2% at the current price. The fair value from historical multiples is 849.32 USD. The reverse DCF implies growth of 10.4% a year, while revenue grew at a compound rate of 26.1% over five years.

The strongest numbers are ROIC of 107.0% against a WACC of 13.0%, free cash flow conversion of 149.6% over the last twelve months, and net debt to EBITDA of -0.79, which means net cash. The weakest are price-to-sales of 3.1 against a ten-year median of 0.95, price-to-book of 11.7 against a median of 3.9, and a current ratio of 1.15. If revenue growth slowed toward the 10.4% the price implies, the valuation premiums would be harder to justify.

Financial health

Financial health is green, with three signals good and one neutral: the balance sheet carries the case. The current ratio is 1.15 and the quick ratio 1.07, net debt to EBITDA is -0.79, debt to equity is 0.11, and interest coverage is 265.6 times. The Altman Z-score is 6.27, in the safe zone, although the Altman model was designed for manufacturers and this company is a contractor, so it is a rough guide. Insolvency risk: low, about 0.6% by the estimate of the Ohlson model over one to two years.

Earnings quality

Earnings quality is green, with all four assessed signals good. Free cash flow conversion is 149.6% on a trailing twelve-month basis and 120.7% over five years. The accrual ratio is -2.9%, so cash generation exceeds reported earnings. Stock-based compensation is 0.3% of revenue, and free cash flow after it is 2.40 billion USD. The share count fell at a compound rate of 0.7% a year over five years, which points to buybacks. The Piotroski score is 7 out of 9. The Beneish M-score is not available. The company beat earnings estimates in all 8 of the last quarters, with an average surprise of 28.6%. Current-year estimates rose 3.7% over 90 days, with 7 upward and 1 downward revision in the last 30 days. Next-year estimates rose 11.7% over 90 days, with 9 upward and no downward revisions, and imply growth of 32.2%.

Profitability

Profitability is green, with all four signals good. The gross margin is 25.6% against a ten-year median of 19.8%, the operating margin 16.7% against 6.5%, and the net margin 13.0% against 5.2%. Operating margin stability reads 34.3%. ROIC is 107.0% against a WACC of 13.0%, giving a ROIC minus WACC value of 94.0%. The five-year median ROIC is 23.6%. Return on equity is 48.9% on a trailing basis. The annual DuPont split for 2025 shows a net margin of 11.2%, an asset turnover of 1.41x and an equity multiplier of 2.63x. Returns therefore rest mainly on margins and asset use, not on a heavy debt load.

Growth

Growth is green, with all four signals good. Revenue compounds at 30.0% over three years, 26.1% over five years and 19.1% over ten years. Earnings per share compound at 61.8%, 47.9% and 36.3% over the same periods. Free cash flow per share grew at 32.5% a year over five years. Revenue grew in all 10 of the last 10 years. These rates are well above the 10.4% growth implied by the current price, which is discussed under valuation.

Valuation

Valuation is yellow, with one neutral signal and no good or bad ones. Against their ten-year medians, the P/E is 24.0 against 20.3 (a premium of 18.3%), EV/EBITDA is 16.5 against 12.4 (a premium of 33.0%), and P/FCF is 16.0 against 18.0 (a discount of 10.6%). Price-to-sales is 3.1 against 0.95, and price-to-book is 11.7 against 3.9. The free cash flow yield is 6.2%. The DCF gives 1603.40 USD per share at a discount rate of 13.11%, with the terminal value making up 46.8% of it. The fair value band is 981.09 to 1471.64 USD, and the fair value from historical multiples is 849.32 USD. The reverse DCF implies growth of 10.4%, against revenue growth of 26.1% over five years. The fair value is an estimate built on fixed assumptions, including a 5% equity risk premium and capped growth, not a price target. The dividend yield is 0.27%, with a forward yield of 0.39% and a payout on free cash flow of 4.3%.

Risks

The current ratio of 1.15 leaves less liquidity cushion than the other balance sheet measures, and it is the weakest financial health reading. The valuation premiums are the main exposure: price-to-sales of 3.1 against 0.95 and price-to-book of 11.7 against 3.9 assume that the current margins and growth persist, and a slowdown would expose the price. The EV/EBITDA premium of 33.0% points the same way. The beta of 1.643 indicates larger price swings than the market. The Beneish M-score is not available, so manipulation risk cannot be screened on that measure. This analysis has no debt maturity schedule and no revenue by segment, so refinancing risk and the sources of growth cannot be assessed.