This construction company beat analysts’ estimates by $0.19 last quarter, and five analysts have raised their EPS forecasts for the company in the past 30 days.
EMCOR Group, Inc. (EME)
From Validea Hot List Newsletter
Strategy: Growth/Value Investor
Based on: James P. O’Shaughnessy
EMCOR Group, Inc. (EME) is an electrical and mechanical construction, and facilities services firm in the United States. The company provides building services and industrial services. Its segments are United States electrical construction and facilities services; United States mechanical construction and facilities services; United States building services; United States industrial services, and United Kingdom building services.
As of December 31, 2016, its services were provided to a range of commercial, industrial, utility and institutional customers through approximately 75 operating subsidiaries and joint venture entities. It is providing construction services relating to electrical and mechanical systems in various types of non-residential and certain residential facilities, and in providing services relating to the operation, maintenance and management of facilities, including refineries and petrochemical plants. It operates various electrical and mechanical systems.
MARKET CAP: PASS: The first requirement of the Cornerstone Growth Strategy is that the company has a market capitalization of at least $150 million. This will screen out the companies that are too illiquid for most investors, but still include a small growth company. EME, with a market cap of $4,623 million, passes this criterion.
EARNINGS PER SHARE PERSISTENCE: PASS: The Cornerstone Growth methodology looks for companies that show persistent earnings growth without regard to magnitude. To fulfill this requirement, a company’s earnings must increase each year for a five year period. EME, whose annual EPS before extraordinary items for the last 5 years (from earliest to the most recent fiscal year) were 2.58, 2.72, 3.02, 3.16 and 4.89, passes this test.
PRICE/SALES RATIO: PASS: The Price/Sales ratio should be below 1.5. This value criterion, coupled with the growth criterion, identify growth stocks that are still cheap to buy. EME’s Price/Sales ratio of 0.55, based on trailing 12 month sales, passes this criterion.
RELATIVE STRENGTH: PASS: The final criterion for the Cornerstone Growth Strategy requires that the Relative Strength of the company be among the top 50 of the stocks screened using the previous criterion. This gives you the opportunity to buy the growth stocks you are searching for just as the market is embracing them. EME, whose relative strength is 69, is in the top 50 and would pass this last criterion.
John Reese, Validea Hot List Newsletter, www.validea.com, 877-439-0506, May 3, 2019