What a time it’s been for Comfort Systems. In the past six months alone, the company’s stock price has increased by a massive 61.8%, setting a new 52-week high of $706.50 per share. This was partly due to its solid quarterly results, and the run-up might have investors contemplating their next move.
Following the strength, is FIX a buy right now? Or is the market overestimating its value? Find out in our full research report, it’s free.
Why Are We Positive On Comfort Systems?
Formed through the merger of 12 companies, Comfort Systems (NYSE:FIX) provides mechanical and electrical contracting services.
1. Surging Backlog Locks In Future Sales
Investors interested in Construction and Maintenance Services companies should track backlog in addition to reported revenue. This metric shows the value of outstanding orders that have not yet been executed or delivered, giving visibility into Comfort Systems’s future revenue streams.
Comfort Systems’s backlog punched in at $8.12 billion in the latest quarter, and over the last two years, its year-on-year growth averaged 29.5%. This performance was fantastic and shows the company has a robust sales pipeline because it is accumulating more orders than it can fulfill. Its growth also suggests that customers are committing to Comfort Systems for the long term, enhancing the business’s predictability. 
2. Outstanding Long-Term EPS Growth
Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.
Comfort Systems’s EPS grew at an astounding 41.2% compounded annual growth rate over the last five years, higher than its 21.8% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
3. New Investments Bear Fruit as ROIC Jumps
ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).
We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Comfort Systems’s ROIC has increased significantly. This is a great sign when paired with its already strong returns. It could suggest its competitive advantage or profitable growth opportunities are expanding.
Final Judgment
These are just a few reasons why we're bullish on Comfort Systems, and with the recent surge, the stock trades at 35.2× forward P/E (or $706.50 per share). Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
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