Quanta Services vs. EMCOR Group: Which Engineering & Construction Stock is a Better Buy?
Quanta Services (PWR) and EMCOR Group (EME) are two of the top engineering stocks. Both sectors are poised to benefit from the infrastructure bill as...
Quanta Services (PWR) and EMCOR Group (EME) are two of the top engineering stocks. Both sectors are poised to benefit from the infrastructure bill as well as the coming CAPEX cycle. Patrick Ryan breaks down which stock is the better buy.
When all is said and done, Biden’s infrastructure spending will likely prove mutually beneficial for engineering/construction stocks as well as the greater good of the United States. Though investors will certainly benefit from more reliable and safer public transportation systems, they can also use Uncle Sam’s impending spending spree as a way to expand their nest egg.
Let’s shift our attention to a couple of engineering and construction stocks investors should zero in on in the days and weeks ahead. Below, we provide a look at Quanta Services (PWR) and EMCOR Group (EME).
PWR provides specialty contracting services including electric transmission and distribution. PWR operates here in the United States and also abroad in Australia, Canada, and beyond.
PWR recently spiked to a new 52-week high after news broke that it will acquire Blattner Holding Company. The 10% pop was powered by an impressive volume of 1.6 million shares in about two hours of trading, sending the stock all the way up to $114.
Investors are clearly enthused about the acquisition as it provides PWR with a larger share of the renewable energy infrastructure market. The move sets the stage for PWR to be a trailblazer in the continent’s transition to achieving the lofty goal of carbon neutrality across the board.
PWR has a C POWR Rating grade. The stock has a B Momentum component grade yet it has C grades in the Value, Stability, and Growth components. Click here to find out more about PWR's performance in the rest of the POWR Ratings components.
PWR slots in at 32nd out of 88 stocks in the Industrial - Services space. This sector as a whole has a B POWR Rating grade. You can learn more about the Industrial - Services segment by clicking here.
The analysts are bullish on PWR, setting an average price target of $111.13. Keep in mind, the stock began the day around the $100 mark. The analysts' original goal for PWR represented more than a 7% increase. One analyst went as far as establishing a price target of $122. PWR just might reach this target by the end of the year or possibly even the end of September. It is quite reassuring that the stock’s average price target has increased by nearly $34 in the previous 29 weeks.
PWR's massive upward move and likely volatility to come in the days ahead is an aberration. The stock is fairly docile unless big news breaks. PWR's beta is only 1.25, so it will probably hold steady moving forward unless there are reverberations from the company's latest announcement.
EME is one of the top providers of building, infrastructure, construction, and industrial services for all sorts of different businesses in sectors ranging from utilities to industrial and commercial. About one-quarter of EME’s revenue stems from its electrical construction and facilities services segment. Such services include electrical systems, lighting systems, electrical power, fiber optic lines, and data/voice communication.
EME has a forward P/E ratio of 17.20. Investors should view this reasonable ratio as a bullish sign that EME has the potential to move beyond its 52-week high of $129.45. The stock is currently priced at $122 and change.
EME has a 1.22 beta, meaning it won't make wild moves unless the market as a whole also makes a significant move. The analysts have high hopes for the stock. The average analyst price target for EME is $134.20, meaning it has a 10.45% upside.
EME has an A POWR Rating grade. This grade indicates the stock is a Strong Buy. EME has Bs in the Quality, Sentiment, and Stability components of the POWR Ratings. Click here to find out how the stock fares in the remainder of the POWR Ratings components including Growth, Momentum, and Value.
Out of the 88 publicly traded companies in the Industrial - Services sector, EME is ranked second overall. This category as a whole has a B POWR Rating grade. You can learn more about it by clicking here.
Which is the Better Buy?
EME is clearly the better play. Add this POWR Ratings beast to your portfolio and don’t look back.
PWR shares were trading at $114.07 per share on Friday morning, up $0.03 (+0.03%). Year-to-date, PWR has gained 58.60%, versus a 21.80% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management.
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