Looking back on engineering and design services stocks’ Q2 earnings, we examine this quarter’s best and worst performers, including EMCOR (NYSE: EME) and its peers.
Companies providing engineering and design services boast ever-evolving technical expertise. Compared to their counterparts who manufacture and sell physical products, these companies can also pivot faster to more trending areas due to their smaller physical asset bases. Green energy and water conservation, for example, are current themes driving incremental demand in this space. On the other hand, those providing engineering and design services are at the whim of construction and infrastructure project volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates.
The 5 engineering and design services stocks we track reported a very strong Q2. As a group, revenues beat analysts’ consensus estimates by 2.8% while next quarter’s revenue guidance was in line.
In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.
Best Q2: EMCOR (NYSE: EME)
Through its network of over 70 subsidiaries, EMCOR (NYSE: EME) provides electrical, mechanical, and building construction and services
EMCOR reported revenues of $4.30 billion, up 17.4% year on year. This print exceeded analysts’ expectations by 4.9%. Overall, it was a stunning quarter for the company with an impressive beat of analysts’ EBITDA estimates.
Tony Guzzi, Chairman, President, and Chief Executive Officer of EMCOR, commented, “We had an outstanding second quarter, maintaining our momentum with quarterly revenue growth of 17.4% and an exceptional 9.6% operating margin. Once again, we set new records in key financial and operational metrics by executing well for our customers within the diverse sectors we serve. The demand for EMCOR's specialty contracting services remains robust. Our Remaining Performance Obligations are again at an all-time high, and our pipeline continues to be strong, supporting our positive outlook for the rest of the year and reinforcing our increase in financial guidance for the full-year 2025. "
Unsurprisingly, the stock is down 1.9% since reporting and currently trades at $627.28.
Sterling (NASDAQ: STRL)
Involved in the construction of a major highway, the Grand Parkway in Houston, TX, Sterling Infrastructure (NASDAQ: STRL) provides civil infrastructure construction.
Sterling reported revenues of $614.5 million, up 5.4% year on year, outperforming analysts’ expectations by 10.8%. The business had an exceptional quarter with a solid beat of analysts’ EBITDA estimates.
Sterling scored the biggest analyst estimates beat among its peers. However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $275.
Is now the time to buy Sterling? Access our full analysis of the earnings results here, it’s free.
Slowest Q2: AECOM (NYSE: ACM)
Founded in 1990 when a group of engineers from five companies decided to merge, AECOM (NYSE: ACM) provides various infrastructure consulting services.
AECOM reported revenues of $4.18 billion, flat year on year, falling short of analysts’ expectations by 3.3%. It was a mixed quarter as it posted a solid beat of analysts’ adjusted operating income estimates.
AECOM delivered the weakest performance against analyst estimates and slowest revenue growth in the group. Interestingly, the stock is up 11.9% since the results and currently trades at $125.40.
Read our full analysis of AECOM’s results here.
MasTec (NYSE: MTZ)
Involved in the 1996 Olympic Games MasTec (NYSE: MTZ) is an infrastructure construction company that specializes in the telecommunications, energy, and utility industries.
MasTec reported revenues of $3.54 billion, up 19.7% year on year. This number beat analysts’ expectations by 4.2%. Overall, it was a strong quarter as it also recorded an impressive beat of analysts’ adjusted operating income estimates and full-year revenue guidance beating analysts’ expectations.
MasTec delivered the fastest revenue growth and highest full-year guidance raise among its peers. The stock is down 4.7% since reporting and currently trades at $180.37.
Read our full, actionable report on MasTec here, it’s free.
Dycom (NYSE: DY)
Working alongside some of the most popular mobile carriers in the world, Dycom (NYSE: DY) builds and maintains telecommunications infrastructure.
Dycom reported revenues of $1.38 billion, up 14.5% year on year. This result came in 2.5% below analysts' expectations. In spite of that, it was a strong quarter as it logged an impressive beat of analysts’ adjusted operating income estimates and a solid beat of analysts’ EBITDA estimates.
The stock is down 7.6% since reporting and currently trades at $248.99.
Read our full, actionable report on Dycom here, it’s free.
Market Update
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.
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