Comfort Systems has been on fire lately. In the past six months alone, the company’s stock price has rocketed 62.9%, reaching $1,129 per share. This was partly thanks to its solid quarterly results, and the performance may have investors wondering how to approach the situation.
Following the strength, is FIX a buy right now? Or is the market overestimating its value? Find out in our full research report, it’s free.
Why Is FIX a Good Business?
Formed through the merger of 12 companies, Comfort Systems (NYSE:FIX) provides mechanical and electrical contracting services.
1. Surging Backlog Locks In Future Sales
We can better understand Construction and Maintenance Services companies by analyzing their backlog. This metric shows the value of outstanding orders that have not yet been executed or delivered, giving visibility into Comfort Systems’s future revenue streams.
Comfort Systems’s backlog punched in at $9.38 billion in the latest quarter, and over the last two years, its year-on-year growth averaged 33.6%. This performance was fantastic and shows the company has a robust sales pipeline because it is accumulating more orders than it can fulfill. Its growth also suggests that customers are committing to Comfort Systems for the long term, enhancing the business’s predictability.
2. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Comfort Systems’s EPS grew at an astounding 45% compounded annual growth rate over the last five years, higher than its 23.7% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
3. New Investments Bear Fruit as ROIC Jumps
ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).
We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Fortunately, Comfort Systems’s ROIC has increased significantly over the last few years. This is a great sign when paired with its already strong returns. It could suggest its competitive advantage or profitable growth opportunities are expanding.
Final Judgment
These are just a few reasons why Comfort Systems is a cream-of-the-crop industrials company, and after the recent rally, the stock trades at 38.3× forward P/E (or $1,129 per share). Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More Than Comfort Systems
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