Specialty construction contractor company EMCOR (NYSE: EME) met Wall Streets revenue expectations in Q3 CY2025, with sales up 16.4% year on year to $4.30 billion. The company’s outlook for the full year was close to analysts’ estimates with revenue guided to $16.75 billion at the midpoint. Its GAAP profit of $6.57 per share was 0.7% above analysts’ consensus estimates.

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Tony Guzzi, Chairman, President, and Chief Executive Officer of EMCOR, commented, “We had an outstanding third quarter, with revenue growth of 16.4% and an exceptional 9.4% operating margin. Our results were driven by strong execution within the diverse sectors we serve as we continue to perform on complex and challenging projects. Our Remaining Performance Obligations are again at an all-time high as we continue to win and earn new business across multiple sectors, geographies, and trades. Our pipeline remains strong, reflecting the demand for our services and supporting our positive outlook for the rest of the year."

Company Overview

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

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, EMCOR grew its sales at an excellent 12.7% compounded annual growth rate. 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 15.9% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.

EMCOR also breaks out the revenue for its most important segments, Mechanical Construction and Facilities Services and Building Services , which are 41.4% and 18.9% of revenue. Over the last two years, EMCOR’s Mechanical Construction and Facilities Services revenue (design, integration, installation) averaged 20.2% year-on-year growth while its Building Services revenue (maintenance, electrical, plumbing) averaged 1.4% growth.

This quarter, EMCOR’s year-on-year revenue growth was 16.4%, and its $4.30 billion of revenue was in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 8.5% over the next 12 months, a deceleration versus the last two years. We still think its growth trajectory is satisfactory given its scale and indicates the market is forecasting 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 7.3% 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 3.9 percentage points over the last five years, as its sales growth gave it operating leverage.

In Q3, EMCOR generated an operating margin profit margin of 9.4%, 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 58.7% compounded annual growth rate over the last five years, higher than its 12.7% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into EMCOR’s quality of earnings can give us a better understanding of its performance. As we mentioned earlier, EMCOR’s operating margin was flat this quarter but expanded by 3.9 percentage points over the last five years. On top of that, its share count shrank by 18.5%. 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 shorter period to see if we are missing a change in the business.

For EMCOR, its two-year annual EPS growth of 47.1% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q3, EMCOR reported EPS of $6.57, up from $5.80 in the same quarter last year. This print was close to analysts’ estimates. Over the next 12 months, Wall Street expects EMCOR’s full-year EPS of $24.87 to grow 7.3%.

Key Takeaways from EMCOR’s Q3 Results

Revenue was just in line, and while the company raised full-year guidance for both revenue and EPS, it was a small lift. The market was hoping for more, especially after strong results from peer Comfort Systems (FIX). The stock traded down 13.5% to $672 immediately following the results.

The latest quarter from EMCOR’s wasn’t that good. One earnings report doesn’t define a company’s quality, though, so let’s explore whether the stock is a buy at the current price. We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.