Emcor a Stock to Buy as Company Beats Estimates Again

| About: EMCOR Group, (EME)

EMCOR Group reported a record contract backlog at the end of the second quarter as revenues rose 25.6%. The company has surprised on estimates 3 out of the last 4 quarters by an average of 19.14%. EMCOR's forward P/E is 12.28.

Company Description

EMCOR Group, Inc. (NYSE:EME) plans and installs systems inside structures in areas such as electrical, mechanical, lighting, heating, security, communications and power generation. The company services its customers from 170 locations worldwide.

EME, a Zacks #1 Rank (Strong Buy), is involved in the design or modeling of many different types of facilities from specialized cooling systems to large-scale instrumentation for cogeneration systems in hospitals and educational facilities. EME also plans, among other things, energy solutions for air quality testing and automation.

EMCOR Beat Wall Street Estimates for the Second Quarter with Record Results

On July 29, EMCOR reported second quarter earnings that surprised on analysts' estimates by 16.07%, or 9 cents a share. Net income rose 68.1% to $44 million, or 65 cents per share, from $26.2 million, or 39 cents per share, in the second quarter of 2007. Analysts expected 56 cents per share.

Revenues jumped 25.6% to $1.72 billion from $1.37 billion a year ago. Organic growth rose 12% in the period.

The company also saw a record contract backlog by the end of the second quarter. The contract backlog increased 9.7% over a year ago to $4.67 billion as of June 30, 2008. That was a 6.5% increase over the backlog as of Mar 31, 2008.

EME Issues Bullish Full Year Guidance

Despite the challenging economic conditions, EMCOR stated that its markets continue to be strong and there was ongoing demand for the company's services. EME believes it is in a good position to continue its strong performance in the second half of 2008.

The company said it expects to generate revenues for the full-year 2008 in the range of $6.8 billion to $7.0 billion. Earnings per share should be in the range of $2.32 to $2.47 for the year.

Consensus Estimates Rise

In just the last 7 days, consensus estimates jumped for the third quarter and the full year. For the third quarter, estimates moved up 2 cents to 63 cents from 61 cents per share. For the year, estimates are up 2 cents to $2.37 from $2.35 per share in the last week which would put the consensus near the lower end of the company's guidance range.

Value Fundamentals

EMCOR's forward P/E is 12.28, under the industry average of 22.55. Its price-to-book (P/B) is 2.2. The company has a one year return on equity [ROE] of 16.81%.