Comfort Systems vs. AECOM: Which Construction Stock to Pick?

Core Insights - The engineering, contracting, and building systems services market is experiencing robust demand driven by government initiatives and infrastructure spending globally [1][2] - Recent Federal Reserve rate cuts are expected to further enhance market conditions by lowering financing costs, encouraging investments in large-scale projects [2] Comfort Systems USA, Inc. (FIX) - Comfort Systems has a market capitalization of approximately $28.99 billion and is benefiting from strong demand in industrial and technology-driven construction [4] - The company's backlog reached a record $8.12 billion as of June 30, 2025, up from $5.77 billion the previous year, indicating strong booking momentum [4][9] - Recent acquisitions, including Right Way Plumbing & Mechanical LLC for $64.8 million, are expected to contribute $60-$70 million annually in revenues, enhancing market share [5] - The company increased its quarterly dividend by five cents to 50 cents per share, reflecting positive investor sentiment and commitment to shareholder value [6] - FIX's projected EPS growth for 2025 is 52.4%, significantly higher than AECOM's 15.9%, with a trailing ROE of 39.33% compared to AECOM's 27.87% [9][20] AECOM (ACM) - AECOM has a market capitalization of approximately $17.61 billion and is capitalizing on infrastructure demand both domestically and internationally, particularly in the UK, Canada, and the Middle East [10][11] - The company's backlog reached $24.59 billion, up 5% from the previous year, supported by strong infrastructure demand [10][9] - AECOM is positioned to benefit from significant infrastructure investments announced by the UK government, totaling GBP 725 billion, and ongoing projects in the Middle East [11] - The company is also focusing on growth in key segments such as AI, water, and transportation, with expectations of tripling U.S. data center investments by 2030 [12] - Despite growth opportunities, AECOM faces risks related to government funding and international regulatory changes [13] Comparative Analysis - Comfort Systems is showing a stronger growth trajectory with a higher backlog, better EPS growth projections, and superior ROE compared to AECOM [22][24] - AECOM, while benefiting from global infrastructure opportunities, has a more moderate growth outlook and is more exposed to government spending risks [24][25] - Overall, Comfort Systems is viewed as a better investment opportunity due to its operational efficiency, record backlog, and upward-trending estimates [25]