EMCOR (NYSE:EME) Surprises With Strong Q2, Full-Year Outlook Slightly Exceeds Expectations

Specialty construction contractor company EMCOR (NYSE:EME) reported Q2 CY2025 results topping the market’s revenue expectations, with sales up 17.4% year on year to $4.30 billion. The company’s full-year revenue guidance of $16.65 billion at the midpoint came in 1.1% above analysts’ estimates. Its GAAP profit of $6.72 per share was 17.9% above analysts’ consensus estimates.

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Tony Guzzi, Chairman, President, and Chief Executive Officer of EMCOR, commented, “We had an outstanding second quarter, maintaining our momentum with quarterly revenue growth of 17.4% and an exceptional 9.6% operating margin. Once again, we set new records in key financial and operational metrics by executing well for our customers within the diverse sectors we serve. The demand for EMCOR's specialty contracting services remains robust. Our Remaining Performance Obligations are again at an all-time high, and our pipeline continues to be strong, supporting our positive outlook for the rest of the year and reinforcing our increase in financial guidance for the full-year 2025. "

Company Overview

Through its network of over 70 subsidiaries, EMCOR (NYSE:EME) provides electrical, mechanical, and building construction and services

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Thankfully, EMCOR’s 11.7% annualized revenue growth over the last five years was impressive. Its growth surpassed the average industrials company and shows its offerings resonate with customers, a great starting point for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. EMCOR’s annualized revenue growth of 15.6% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.

We can better understand the company’s revenue dynamics by analyzing its most important segments, Mechanical Construction and Facilities Services and Building Services , which are 40.8% and 18.4% of revenue. Over the last two years, EMCOR’s Mechanical Construction and Facilities Services revenue (design, integration, installation) averaged 21.9% year-on-year growth while its Building Services revenue (maintenance, electrical, plumbing) averaged 2.9% growth.

This quarter, EMCOR reported year-on-year revenue growth of 17.4%, and its $4.30 billion of revenue exceeded Wall Street’s estimates by 4.9%.

Looking ahead, sell-side analysts expect revenue to grow 7.8% over the next 12 months, a deceleration versus the last two years. We still think its growth trajectory is satisfactory given its scale and suggests the market is baking in success for its products and services.

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Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

EMCOR was profitable over the last five years but held back by its large cost base. Its average operating margin of 7.1% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.

On the plus side, EMCOR’s operating margin rose by 3.8 percentage points over the last five years, as its sales growth gave it operating leverage.

This quarter, EMCOR generated an operating margin profit margin of 9.6%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

EMCOR’s EPS grew at an astounding 53.7% compounded annual growth rate over the last five years, higher than its 11.7% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into EMCOR’s earnings to better understand the drivers of its performance. As we mentioned earlier, EMCOR’s operating margin was flat this quarter but expanded by 3.8 percentage points over the last five years. On top of that, its share count shrank by 18.1%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For EMCOR, its two-year annual EPS growth of 54.7% is similar to its five-year trend, implying strong and stable earnings power.

In Q2, EMCOR reported EPS at $6.72, up from $5.25 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects EMCOR’s full-year EPS of $24.10 to stay about the same.

Key Takeaways from EMCOR’s Q2 Results

We were impressed by how significantly EMCOR blew past analysts’ revenue expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. Looking ahead, the company raised full-year revenue and EPS guidance at the midpoints. Overall, we think this was a solid quarter with some key areas of upside. The stock traded up 3.5% to $662.05 immediately following the results.

EMCOR had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.