ZACKSยท2025-06-12 15:10Industry Overview - The United States-based engineering and construction firms are experiencing a boom in public infrastructure demand driven by government initiatives such as the Infrastructure Investment and Jobs Act (IIJA), CHIPS Act, and Inflation Reduction Act (IRA) [1][3] - Public infrastructure spending is at its peak, primarily due to the aim of enhancing supply-chain resilience and boosting domestic manufacturing [3] Company Profiles - EMCOR Group, Inc. (EME) is a leading provider of mechanical and electrical construction, industrial and energy infrastructure, and building services [2] - Quanta Services, Inc. (PWR) specializes in utility and energy infrastructure and is one of North America's top contractors in electric power transmission and distribution [2] EMCOR Group, Inc. (EME) - EMCOR is benefiting from growing infrastructural demand, particularly in data centers, driven by the surge in Artificial Intelligence applications and digital transformation initiatives [5] - The acquisition of Miller Electric on February 3, 2025, enhances EMCOR's electrical construction capabilities and aligns with its growth strategy [6] - As of March 31, 2025, EMCOR's remaining performance obligations (RPOs) reached a record value of $11.75 billion, reflecting a 28% year-over-year growth [7] - EMCOR expects full-year revenues between $16.1 billion and $16.9 billion, indicating year-over-year growth of 10.5-16% [8] Quanta Services, Inc. (PWR) - Quanta's strength lies in delivering complex, large-scale projects such as power grid modernization and renewable energy infrastructure [9] - As of March 31, 2025, Quanta had a total backlog of $35.25 billion, with a 12-month backlog of $19.42 billion, showing significant growth from the previous year [12] - Quanta expects revenues between $26.7 billion and $27.2 billion for 2025, reflecting a 13.8% increase at the midpoint from 2024 [13] Financial Performance and Valuation - EMCOR has a trailing 12-month return on equity (ROE) of 37.1%, significantly higher than Quanta's average of 19.7%, indicating stronger shareholder value generation [10][20] - EMCOR trades at a lower forward price-to-earnings (P/E) ratio compared to Quanta, suggesting a more attractive entry point for investors [10][16] - The Zacks Consensus Estimate for EMCOR's 2025 EPS indicates a 9.6% year-over-year growth, while Quanta's 2025 EPS estimates imply a 15.1% improvement [18][20] Investment Outlook - EMCOR is positioned for steady growth with a discounted valuation, making it an attractive option for investors seeking sustainable returns [22][24] - Quanta, while benefiting from diversified market exposure and energy transition trends, faces challenges due to its premium valuation [23][24]