Emcor Group (EME) versus Granite Construction (GVA) Head-To-Head Analysis

Emcor Group (NYSE: EME) and Granite Construction (NYSE:GVA) are both mid-cap construction companies, but which is the better business? We will contrast the two companies based on the strength of their dividends, risk, valuation, earnings, institutional ownership, analyst recommendations and profitability.

Earnings and Valuation

This table compares Emcor Group and Granite Construction’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Emcor Group $7.55 billion 0.63 $181.93 million $3.58 22.50
Granite Construction $2.51 billion 1.04 $57.12 million $1.31 50.14

Emcor Group has higher revenue and earnings than Granite Construction. Emcor Group is trading at a lower price-to-earnings ratio than Granite Construction, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Emcor Group and Granite Construction, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Emcor Group 0 3 1 0 2.25
Granite Construction 0 2 7 0 2.78

Emcor Group currently has a consensus price target of $80.50, suggesting a potential downside of 0.06%. Granite Construction has a consensus price target of $66.43, suggesting a potential upside of 1.14%. Given Granite Construction’s stronger consensus rating and higher probable upside, analysts clearly believe Granite Construction is more favorable than Emcor Group.

Insider and Institutional Ownership

94.4% of Emcor Group shares are owned by institutional investors. Comparatively, 98.6% of Granite Construction shares are owned by institutional investors. 2.0% of Emcor Group shares are owned by insiders. Comparatively, 1.3% of Granite Construction shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Emcor Group and Granite Construction’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Emcor Group 2.82% 13.94% 5.63%
Granite Construction 1.84% 5.71% 2.93%

Dividends

Emcor Group pays an annual dividend of $0.32 per share and has a dividend yield of 0.4%. Granite Construction pays an annual dividend of $0.52 per share and has a dividend yield of 0.8%. Emcor Group pays out 8.9% of its earnings in the form of a dividend. Granite Construction pays out 39.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Granite Construction has increased its dividend for 5 consecutive years. Granite Construction is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Emcor Group has a beta of 1.01, meaning that its share price is 1% more volatile than the S&P 500. Comparatively, Granite Construction has a beta of 1.24, meaning that its share price is 24% more volatile than the S&P 500.

Summary

Granite Construction beats Emcor Group on 9 of the 17 factors compared between the two stocks.

About Emcor Group

EMCOR Group, Inc. is an electrical and mechanical construction, and facilities services firm in the United States. The Company provides building services and industrial services. Its segments are United States electrical construction and facilities services; United States mechanical construction and facilities services; United States building services; United States industrial services, and United Kingdom building services. As of December 31, 2016, its services were provided to a range of commercial, industrial, utility and institutional customers through approximately 75 operating subsidiaries and joint venture entities. It is providing construction services relating to electrical and mechanical systems in various types of non-residential and certain residential facilities, and in providing services relating to the operation, maintenance and management of facilities, including refineries and petrochemical plants. It operates various electrical and mechanical systems.

About Granite Construction

Granite Construction Incorporated is a heavy civil contractor and construction materials producer in the United States. The Company operates through three segments: Construction, Large Project Construction and Construction Materials. The Company operates across the nation, serving both public and private sector clients. Within the public sector, it concentrates on heavy-civil infrastructure projects, including the construction of streets, roads, highways, mass transit facilities, airport infrastructure, bridges, trenchless and underground utilities, power-related facilities, water and wastewater facilities, utilities, tunnels, dams and other infrastructure-related projects. Within the private sector, the Company offers site preparation and infrastructure services for residential development, energy development, commercial and industrial sites, and other facilities, as well as provides construction management professional services.

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