EME

EMCOR is a high-quality compounder hiding inside a 'boring' SIC bucket. Revenue has compounded from $9.90B (FY2021) to $17.0B (FY2025), while net income more than tripled from $384M to $1.27B — meaning margins expanded the whole way (net margin ~3.9% in 2021 to 7.5% now, operating margin to 10.1% on +27.4% operating-income growth). Diluted EPS rose 31.0% to $28.19, faster than net income because the share count fell 2.1% on $586M of buybacks. Returns on capital are exceptional: 34.6% ROE on an essentially debt-free balance sheet — the MD&A confirms 'there were no direct borrowings outstanding under our revolving credit facility' at Dec 31, 2025, and equity ($3.67B) is backed by $6.01B of retained earnings. This is consistent, accelerating, self-funded growth, exactly the profile the methodology rewards.

Capital allocation reinforces the quality signal. The Board raised the quarterly dividend 60% (from $0.25 to $0.40) starting January 2026 — a confidence tell — alongside ongoing repurchases. Strategically, the company bought Miller Electric (the main driver of a $574M increase in investing outflows) to deepen its electrical/data-center exposure and sold its UK operations to concentrate on the US market. The $3.07B of open purchase obligations points to a healthy forward activity pipeline tied to the electrification/reshoring/data-center capex cycle.