Can Comfort Systems Sustain Growth as Data Center Demand Surges?

Company Performance - Comfort Systems USA (FIX) reported record earnings per share of $4.75, an increase of over 75% year over year, with revenues rising 19% to $1.83 billion, driven by advanced technology projects, particularly in data centers and semiconductor facilities, which accounted for 37% of total revenues, up from 30% a year ago [1][11] - The company's backlog reached a record $6.9 billion, with strong same-store growth and robust bookings in mechanical and electrical segments [2][11] - Operating margins hit a record 11.4% in the quarter, indicating strong execution despite typical seasonal weaknesses [4] Industry Trends - The demand for data-center infrastructure is driving growth for Comfort Systems and its competitors, including EMCOR Group, Inc. and MasTec, Inc. [6][9] - EMCOR's U.S. Electrical Construction and Mechanical Construction segments saw revenue growth of 42.3% and 10.2% year over year, respectively, supported by increased demand in data centers and public infrastructure spending [7][8] - MasTec is benefiting from the rapid expansion of data-center development, driven by investments in power infrastructure and fiber connectivity due to the surge in artificial intelligence and cloud computing [9] Financial Outlook - Comfort Systems' earnings estimates for 2025 and 2026 have trended upward, with projected earnings of $19.28 per share for 2025 and $20.41 for 2026, indicating year-over-year growth of 32.1% and 5.8%, respectively [16] - The stock is currently trading at a forward price-to-earnings ratio of 25.36X, which is a discount compared to industry peers, suggesting a promising valuation for investors [14]