Earnings results often indicate what direction a company will take in the months ahead. With Q2 behind us, let’s have a look at EMCOR (NYSE:EME) and its peers.
Companies providing engineering and design services boast ever-evolving technical expertise. Compared to their counterparts who manufacture and sell physical products, these companies can also pivot faster to more trending areas due to their smaller physical asset bases. Green energy and water conservation, for example, are current themes driving incremental demand in this space. On the other hand, those providing engineering and design services are at the whim of construction and infrastructure project volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates.
The 5 engineering and design services stocks we track reported a very strong Q2. As a group, revenues beat analysts’ consensus estimates by 1.9% while next quarter’s revenue guidance was 0.6% above.
Stocks--especially those trading at higher multiples--had a strong end of 2023, but this year has seen periods of volatility. Mixed signals about inflation have led to uncertainty around rate cuts. Luckily, engineering and design services stocks have performed well with share prices up 11% on average since the latest earnings results.
Best Q2: EMCOR (NYSE:EME)
Through its network of over 70 subsidiaries, EMCOR (NYSE:EME) provides electrical, mechanical, and building construction and services
EMCOR reported revenues of $3.67 billion, up 20.4% year on year. This print exceeded analysts’ expectations by 3.9%. Overall, it was an exceptional quarter for the company with an impressive beat of analysts’ earnings and operating margin estimates.
Tony Guzzi, Chairman, President, and Chief Executive Officer of EMCOR, commented, “We had an exceptional first half of the year, the Company maintained its excellent momentum in the second quarter and again set new records across key financial and operational metrics. Demand for EMCOR’s specialty contracting services remains high, further reinforcing our confidence in the trajectory of the business. Our Remaining Performance Obligations are at near record levels, and our pipeline continues to be robust, all supporting our positive outlook for the rest of the year and gives us confidence to increase financial guidance for 2024.”
EMCOR pulled off the fastest revenue growth and highest full-year guidance raise of the whole group. Unsurprisingly, the stock is up 15% since reporting and currently trades at $409.98.
Sterling (NASDAQ:STRL)
Involved in the construction of a major highway, the Grand Parkway in Houston, TX, Sterling Infrastructure (NASDAQ:STRL) provides civil infrastructure construction.
Sterling reported revenues of $582.8 million, up 11.6% year on year, outperforming analysts’ expectations by 4.1%. The business had a very strong quarter with a solid beat of analysts’ earnings estimates and optimistic EBITDA guidance for the full year.
The market seems happy with the results as the stock is up 24.3% since reporting. It currently trades at $127.69.
Is now the time to buy Sterling? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: MasTec (NYSE:MTZ)
Involved in the 1996 Olympic Games MasTec (NYSE:MTZ) is an infrastructure construction company that specializes in the telecommunications, energy, and utility industries.
MasTec reported revenues of $2.96 billion, up 3% year on year, falling short of analysts’ expectations by 4.2%. Still, it was a a satisfactory quarter as it posted an impressive beat of analysts’ operating margin estimates.
MasTec delivered the weakest performance against analyst estimates, slowest revenue growth, and weakest full-year guidance update in the group. Interestingly, the stock is up 6.9% since the results and currently trades at $113.35.
Read our full analysis of MasTec’s results here.
Dycom (NYSE:DY)
Working alongside some of the most popular mobile carriers in the world, Dycom (NYSE:DY) builds and maintains telecommunications infrastructure.
Dycom reported revenues of $1.20 billion, up 15.5% year on year. This result met analysts’ expectations. It was a very strong quarter as it also put up an impressive beat of analysts’ operating margin estimates and a decent beat of analysts’ earnings estimates.
The stock is down 4.7% since reporting and currently trades at $185.49.
Read our full, actionable report on Dycom here, it’s free.
AECOM (NYSE:ACM)
Founded in 1990 when a group of engineers from five companies decided to merge, AECOM (NYSE:ACM) provides various infrastructure consulting services.
AECOM reported revenues of $4.15 billion, up 13.3% year on year. This result topped analysts’ expectations by 5.2%. Overall, it was a strong quarter as it also put up a decent beat of analysts’ operating margin and earnings estimates. Guidance was fine, as the full year outlook for EBITDA and EPS were roughly in line with expectations.
AECOM achieved the biggest analyst estimates beat among its peers. The stock is up 13.6% since reporting and currently trades at $98.41.
Read our full, actionable report on AECOM here, it’s free.
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