EMCOR Group, Inc. is a large facilities services and construction contractor that generates steady operating cash flow from project work and exhibits a conservatively leveraged, modest‑margin financial profile. Financial Strength and Cash Flow The company shows clear cash-generation and balance-sheet strength: trailing twelve‑month operating cash flow was $366.1M versus TTM net income of $227.2M ,
EMCOR Group, Inc. is a large facilities services and construction contractor that generates steady operating cash flow from project work and exhibits a conservatively leveraged, modest‑margin financial profile.
The company shows clear cash-generation and balance-sheet strength: trailing twelve‑month operating cash flow was $366.1M versus TTM net income of $227.2M, producing a cash‑conversion ratio of about 1.61 and indicating cash earnings exceed accounting profit. Leverage metrics are conservative with interest coverage near 25.48x and debt‑to‑equity around 0.1668, and return on equity has improved to 13.6% in the most recent year. Earnings per share momentum also has support from multi‑year EPS growth, with a three‑year EPS CAGR roughly 10.44%.
There are meaningful constraints on profitability and top‑line consistency. Margins remain thin: gross margin was 14.9%, operating margin 5.1%, and net margin only 3.0% in the latest trailing twelve months. Revenue has been somewhat cyclical, peaking at $6.72B in 2015, falling to $5.62B in 2016 and recovering modestly to $5.80B in 2017, a roughly 16% drop from the 2015 peak to the 2016 trough.
Capital deployment also reflects persistent outflows: investing cash flow was −$138.1M TTM and financing cash flow was −$228.5M, which underscores ongoing cash uses beyond operating activity. The reported Price‑to‑Earnings series shows 0.0x in the available history, a datum that limits simple comparisons on a PE basis.
Key fundamentals to watch going forward are operating cash flow versus net income (OCF $366.1M vs net income $227.2M) and the quality of that cash conversion (Earnings Quality Analysis), the trajectory of revenue and net income (most recent revenue $5.80B, net income $227.2M) in Revenue & Net Income), the divergence of revenue‑per‑share growth (1.8%) and diluted EPS growth (24.9%) in EPS Diluted & Revenue per Share and Revenue & EPS Growth and margin trends (gross 14.9%, operating 5.1%, net 3.0%) in Profit Margin Trends, return on equity (13.6%) in Return on Equity (ROE), and investing/financing cash‑flow behavior (investing -$138.1M, financing -$228.5M) in Strategic Capital Allocation, along with the reported PE series in Price-to-Earnings (PE) Ratio Trend.
The foundation of business quality and long-term value creation
EMCOR Group, Inc.'s revenue series shows an annual peak in 2015 at $6.72B, a decline to $5.62B in 2016, and a modest recovery to $5.80B for the year ended 2017. Quarterly revenue points in the dataset cluster around $1.5B–$1.95B; the most recent quarterly observation is $1.95B for the period ended 2018-06-30, comparable to prior quarterly readings of $1.93B (2016-06-30) and $1.89B (2017-03-31).
Net income has generally risen from mid-single-digit to low-hundred-million-dollar levels across the series after the 2010 loss of $175.6M. Reported net income peaked at $172.3M in 2015, dipped to $130.4M at the 2016 year end, and rose to $162.6M for the period ended 2017-12-31. The most recent revenue was $1.95B (2018-06-30). The most recent net income was $162.6M (2017-12-31).
Why Growth Matters
Consistent revenue and earnings growth are the lifeblood of successful long-term investments. Companies that can grow their top line (revenue) and bottom line (net income) over many years demonstrate they have products or services customers value and are willing to pay for repeatedly.
Revenue Growth shows whether the company is expanding its market reach, gaining market share, or successfully launching new products.Net Income Growth demonstrates the company can convert that revenue into actual profits while managing costs effectively.
Look for steady, sustainable growth rather than erratic spikes. The best businesses compound earnings year after year, creating tremendous value for shareholders over time. Companies that can grow earnings faster than revenue are improving their profitability—a sign of operational excellence and competitive strength.
Year-over-year growth rates for revenue and earnings per share
Reading the Growth Rate Chart
This chart converts the absolute per-share figures into year-over-year percentage changes, making it easy to see whether growth is accelerating, decelerating, or reverting to trend — regardless of the company's absolute size.
Revenue per Share Growth (1-year, split-adjusted) measures how quickly the top line is expanding on a per-share basis. Sustained positive growth signals that the company continues to win customers and grow its addressable market.EPS Diluted Growth (1-year, split-adjusted) measures how quickly earnings are compounding for each shareholder. When EPS growth consistently outpaces revenue growth, operating leverage and margin expansion are at work.
Look for consistency, not just magnitude. A company that reliably grows EPS 10–15% per year is far more valuable than one that alternates between 50% spikes and deep contractions. Negative EPS growth during a period of positive revenue growth is a red flag — costs are rising faster than sales. Quarters where both lines converge near zero or go negative deserve close scrutiny.
How revenue converts to net income for the most recent annual period
Period Information
Report Type: Annual (10-K)
Period: Jan 2017 to Dec 2017
Analyzing long-term margin stability and competitive positioning
EMCOR Group, Inc.'s margins improved in the most recent period, with a clear uptick in 2017 versus 2016. Gross margin rose to 14.9% in the trailing twelve months ended 2017‑12‑31, up from 13.7% at the end of 2016. Operating margin increased to 5.1% in the same period, above the ~4.1% level reported at 2016‑12‑31, and net profit margin rose to 3.0% from 2.4% at the end of 2016.
Over the longer sample the company has exhibited relatively narrow variability: gross margins ranged roughly from the mid‑12% area in earlier years to the high‑teens peak of 14.9% most recently; operating margins have generally sat in the mid‑3% to low‑5% band; net margins have been low single digits, moving from about 1.9%–2.7% historically to 3.0% in the latest period. The most recent gross margin was 14.9%, operating margin 5.1%, and net profit margin 3.0%.
Understanding Profit Margins
Between Jan 2017 and Dec 2017, Emcor Group Inc converts every dollar of revenue through the following stages:
Sustainable competitive advantages reveal themselves through consistently superior profit margins over extended periods. Companies with durable economic moats maintain pricing power and operational efficiency that competitors struggle to match.
A sign of durable competitive advantage is earning sustained higher margins than competitors.Look for margins that remain stable or improve over time, especially during economic downturns. Declining margins may signal increasing competition, pricing pressure, or deteriorating business fundamentals.
Comparing reported earnings to actual cash generation
EMCOR Group, Inc.'s trailing twelve-month net income shows a multiyear increase with some earlier variability: $130.8M (2011), $123.8M (2013), then rising to $168.7M (2014), $172.3M (2015), $181.9M (2016) and accelerating to $227.2M in the most recent 2017 period. The clearest inflection is the step-up between 2016 and 2017, where net income increased materially year-over-year.
At the latest 2017-12-31 observation, trailing twelve-month operating cash flow is $366.1M, which exceeds the trailing twelve-month net income of $227.2M, indicating a positive cash-over-earnings gap in the most recent data.
The most recent trailing twelve-month operating cash flow was $366.1M. The most recent trailing twelve-month net income was $227.2M.
The Earnings vs. Cash Flow Gap
Reported earnings (Net Income) doesn't always reflect actual cash generation. Companies use accrual accounting, which recognizes revenue when earned and expenses when incurred—not when cash actually changes hands. This creates timing differences and opportunities for accounting discretion that can mask underlying business health.
Net Income (the "earnings" number) can be influenced by non-cash items like depreciation, stock-based compensation, and changes in accounting estimates.Operating Cash Flow, however, shows the actual cash the business generates from its core operations—a harder number to manipulate.
What to Look For
Key Insight: Companies with durable competitive advantages typically show operating cash flow that meets or exceeds net income over time, demonstrating they convert accounting profits into actual cash that can be returned to shareholders or reinvested in the business.
Measuring management's efficiency at generating profits from shareholder capital
EMCOR Group, Inc.'s trailing twelve-month Return on Equity has risen in the most recent year, reaching 13.6% for the period ended 2017-12-31, up from 11.8% in 2016 and 11.6% in 2015. From 2014 through 2016 the ROE was relatively stable around the 11.6–11.8% range before the pickup in 2017, so the most recent data point represents the highest level in the displayed series.
A notable inflection occurred earlier in the series: ROE declined to 8.4% in 2013 after 12.6% in the 2012 entry, then recovered and moved steadily higher through 2014–2017. The most recent trailing twelve-month Return on Equity (ROE) was 13.6% as of the period ending 2017-12-31.
The Gold Standard of Profitability
Return on Equity (ROE) is a powerful measure of how effectively a company's management is using the money shareholders have invested. Calculated by dividing Net Income by Shareholders' Equity, it reveals how much profit is generated for every dollar of equity capital.
A consistently high ROE (typically above 15-20%) is often the signature of a "quality" business with a durable competitive advantage. It indicates that the company can generate high returns on its own capital, which it can then reinvest at these high rates to compound value over time.
What to Look For:
How the company generates and deploys its cash
EMCOR Group, Inc. shows a clear positive operating cash flow in the most recent trailing twelve months, with operating cash at $366.1M, which is larger than the absolute values of the other two cash-flow categories.
Investing cash flows have been negative across the historical series, but the magnitude of outflows has moderated in recent years from a peak of -$483.4M in 2013 to -$138.1M in 2017.
Financing cash flows have been negative in recent years as well, with a shift from a positive $167.0M in 2013 to sustained outflows (for example -$229.9M in 2014 and -$149.5M in 2015), returning to -$228.5M in 2017.
The most recent data point (period ending 2017-12-31) shows operating cash flow TTM of $366.1M, investing cash flow TTM of -$138.1M, and financing cash flow TTM of -$228.5M.
Understanding Company Strategy
Capital allocation refers to how management decides to spend and invest the company's cash. Analyzing the three primary categories of cash flow reveals a company's true operational strategy:
What to look for: Is the company bootstrapping (funding growth solely from operating cash)? Are they borrowing to fund aggressive expansion or dividends? Or are they capital raising by issuing new shares, potentially diluting your ownership? A healthy, mature company typically generates strong operating cash, moderately invests in growth, and returns the surplus to shareholders through financing activities.
Net assets attributable to each share — the accounting floor of intrinsic value
Why Book Value per Share Matters
Book value per share is the net worth of the company — total assets minus total liabilities — divided by shares outstanding (split-adjusted). It represents the theoretical liquidation value per share if every asset were sold and every liability repaid at balance-sheet carrying values. It is the accounting foundation upon which much of equity valuation is built.
A steadily rising book value per share is one of the most reliable signals of compounding wealth creation. It means the company is retaining earnings and building net worth faster than it is returning capital or eroding it. Warren Buffett famously tracked Berkshire Hathaway's book value per share for decades as his primary measure of intrinsic value growth.
Context is essential. Asset-heavy businesses (banks, manufacturers, utilities) should be judged by book value more directly than asset-light businesses (software, consumer brands), where intangible assets like intellectual property and customer loyalty may far exceed their balance-sheet carrying values. A company trading at a large premium to book value is not necessarily overvalued — it may simply possess competitive advantages that accounting rules do not capture. Conversely, a declining book value per share — especially over multiple years — is a serious warning sign of capital destruction.
How much of the company is financed by debt versus shareholders' equity
Reading the Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio compares total financial debt to shareholders' equity. A ratio of 1.0 means the company has borrowed one dollar for every dollar of equity; a ratio of 2.0 means it has borrowed twice as much as it owns. Financial leverage amplifies both returns and risk: in good times, debt turbocharges equity returns; in bad times, it accelerates losses and can threaten solvency.
Trends matter more than a single number. A rising D/E ratio can mean the company is taking on debt to fund growth — potentially value-creating if returns exceed the cost of capital. But it can also mean equity is being eroded through losses or that the business is borrowing simply to sustain operations. A falling D/E ratio generally reflects strengthening financial health: earnings are being retained, debt maturities are being paid down, or both.
Industry norms vary enormously. Capital-intensive sectors (utilities, real estate, financials) routinely carry high D/E ratios that would be alarming in, say, a technology company. Always compare against sector peers. As a rough rule of thumb, a D/E above 2× in a cyclical business warrants careful scrutiny of interest coverage and refinancing risk.
Short-term liquidity — can the company cover its near-term obligations?
Liquidity: Can the Business Pay Its Bills?
The current ratio is calculated as current assets divided by current liabilities. A ratio of 1.5 means the company has $1.50 of short-term assets — cash, receivables, inventory — for every $1.00 of obligations due within the next twelve months. It is the most direct measure of near-term financial resilience: can the business meet its obligations without needing to raise new capital or sell long-term assets at a discount?
A ratio above 1.0 is generally healthy, meaning current assets exceed current liabilities. A ratio consistently above 2.0 may indicate the company is holding excess cash or inventory that could be deployed more productively. A ratio below 1.0 is a warning sign — the company is relying on future cash generation or external financing to cover its near-term obligations, which is manageable in normal conditions but dangerous during a downturn.
Trends and context matter.A declining current ratio isn't always alarming — highly efficient businesses (e.g., large retailers with reliable daily cash flows) often run leaner balance sheets intentionally. Conversely, a rapidly rising current ratio can signal slowing sales causing inventory to build, or customers taking longer to pay. Always compare the trend against industry peers and cross-reference with the cash flow statement to assess whether the business is genuinely liquid or just holding non-cash current assets.
How much the market is paying for each dollar of company earnings
EMCOR Group, Inc.'s reported Price-to-Earnings (PE) ratio is flat across the available history; every reported period from 2011 through 2017 shows a PE ratio of 0.0x. There are no observable upward or downward movements in the series—recent quarters, including 2016 and 2017, remain at the same 0.0x level as earlier years.
There are no identifiable inflection points in the data provided and the current level as of the most recent period (2017-12-31) is 0.0x. The most recent reported Price-to-Earnings (PE) ratio was 0.0x.
What Is the PE Ratio?
The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics in investing. It divides the current stock price by the company's earnings per share (EPS), revealing how much investors are willing to pay for each dollar of earnings. A high PE can signal that the market expects strong future growth, while a low PE may suggest undervaluation—or reflect genuine concerns about the company's prospects.
Context matters:PE ratios vary significantly across industries. High-growth technology companies routinely trade at PE ratios above 30x or 40x, while mature, low-growth sectors like utilities or financials often trade closer to 10–15x. Always compare a company's PE to its own history and its industry peers, not just an absolute number.
What to Look For:
Key Insight:The PE ratio is a snapshot of market sentiment and expectations. Tracking it over time alongside earnings trends reveals whether the market's valuation has expanded or contracted—and whether that change is justified by fundamentals.