Emcor Group is Thursday's pick for IBD 50 Growth Stocks To Watch as the building services company climbs back from a pullback. The company crushed earnings expectations and raised guidance July 25, but Emcor's stock hasn't exactly reflected the robust results.
Emcor Group provides construction and building services used for air conditioning and heating, security, fire protection and power generation systems.
Emcor stock ranks No. 1 out of 12 stocks in the Building-Maintenance & Services group, which holds the No. 20 spot out of the 197 IBD industry groups.
Emcor Stock Improving From Recent Lows
Emcor stock is in a stage-three base with a 401.98 buy point, which is also its all-time high reached on May 28.
The stock sank 2.8% in heavy volume on July 25, despite the company's positive earnings report. Shares rebounded 5% the next day in heavy action, then were volatile before hitting a low on Aug. 5. Shares have been climbing back since then.
The stock reclaimed its 50-day moving average Wednesday after testing the line for several days. Its relative strength line is trending sideways after dropping from May highs. Shares have climbed 73% so far this year.
Profit Growth Looks To Slide
Emcor topped second-quarter earnings and sales estimates in late July. Management also raised its full-year 2024 profit and revenue guidance, which topped views.
Quarterly earnings grew 78% following gains of 67%, 70% and 80% in the prior quarters. Its sales growth accelerated for five straight quarters to 20% in Q2, improving from 11% five quarters ago.
FactSet estimates show profit growth easing to 38% in the current quarter. The next several quarters will come up against tough year-ago comparisons.
Its IBD earnings line, plotted with a green line on the MarketSurge weekly chart, has been climbing. This fairly new feature can be added from the settings tools, found in the wrench icon of MarketSurge.
Q3 sales growth is estimated at 18%, in line with recent quarters, then moderating to gains of 11%, 5% and 4% the following three quarters.
Analysts' estimate for full-year profit growth at 46% and 7% for 2025.
Mutual finds have been bolstering shares, with 1,364 owning the stock in June, up from 1,010 in March and 964 in December. The building services stock holds a best-possible 99 IBD Composite Rating and a 98 Earnings Per Share Rating.
