Data-center construction is lifting earnings for EMCOR Group, Inc. (NYSE:EME) and IES Holdings, Inc. (NASDAQ:IESC). Yet the faster-growing company also just changed its business and financing profile. That makes this a choice between proven execution at a lower earnings multiple and a smaller contractor expanding aggressively into customers’ broader construction budgets.
At October 5 prices, consensus forward earnings multiples were about 22 times for EMCOR and 27 times for IES. Those estimates deserve particular care for IES: its DBM Global acquisition closed that morning, and a quoted multiple cannot be assumed to incorporate every acquisition effect.
Photo from Oracle website
IES ranks fifth and EMCOR seventh on trailing consolidated revenue growth. The leader’s 37.79% growth exceeds their 22.66% and 18.92%. Find the contractors outrunning both before paying a premium for IES.
EMCOR’s lower multiple buys substantial operating momentum
In its July 30 results, EMCOR reported second-quarter revenue of $5.15 billion, up 19.8%, and earnings of $9.06 per share, up 34.8%. Operating income reached $547.3 million, a 10.6% margin. Revenue expanding more slowly than earnings is useful evidence that additional work is producing operating leverage. The spending opportunity also extends outside the building; Quanta management’s earlier outlook reached $2.4 trillion through 2030. Find which work could capture that larger budget.
Remaining performance obligations reached $17.14 billion, up 43.9% from a year earlier. Management raised its full-year earnings range to $32-$33.25 per share. At roughly $779, the stock costs about 24 times that guidance midpoint, a separate current-year measure from the consensus forward multiple above.
The attraction is a larger contractor converting demand into profits today. Its principal risk is extrapolating unusually favorable execution. A growing order book also requires labor, procurement and project management; a backlog cannot protect margins if costs overrun contract assumptions. Investors paying for sustained earnings momentum need to watch the profitability of work completed, alongside the volume booked.
A more powerful AI rack changes more than the cooling equipment bill: it changes the mechanical work surrounding it. See the installation and integration opportunity that makes EMCOR more than a cooling-hardware bet.
Insider Monkey’s database showed 62 hedge funds with reportable long positions at the end of Q2 2026, up from 58 in Q1. AQR Capital Management reduced its shares by about 0.7%. That small trim provides context, while the company’s operating results carry the investment case.
IES has more growth, and a new balance-sheet test
IES reported on July 31 that fiscal third-quarter revenue rose 40% to $1.24 billion. Communications revenue, supported primarily by data centers, rose 51% to $453.1 million. The segment produced $83.6 million of operating income, illustrating why the business attracts growth investors. Faster growth need not always demand a higher multiple: one power-and-cooling supplier grew 47% organically in Q2 while trading below its rival on October 2 guidance. Find the cheaper supplier and the cash conversion test.
Other results require more discrimination. Residential revenue fell 6%, and its operating income declined sharply. Infrastructure Solutions also benefited from the addition of Gulf Island. These are consolidated businesses with different growth drivers; the headline increase is not a pure measure of organic AI demand.
On October 5, IES completed its acquisition of DBM Global for about $691 million. The consideration included $545 million of cash and 430,974 IES shares valued at roughly $146 million. Cash on hand and credit-facility borrowings funded the cash portion. Consequently, June’s debt-free balance sheet no longer describes the current company.
DBM adds structural steel engineering, fabrication and erection, with about $1.5 billion of trailing revenue. Offering customers electrical and structural capabilities creates a credible expansion opportunity. But shareholders now must assess integration, acquisition borrowing and incremental cash generation, alongside data-center growth. Electrical contractors share the spending cycle with a supplier that announced a $400 million-plus campus order in May. Identify that supplier and the grid-equipment alternatives to acquisition-funded construction growth.
IES had 39 hedge-fund holders in Q2, up from 34 in Q1; Royce & Associates’ share position was unchanged. These filings predate the acquisition announcement and closing. September 15 short interest was 1,205,028 shares, with about 4.1 days to cover. That snapshot also predates the closing and cannot establish how investors positioned afterward.
Faster growth is worth buying only at the right price
EMCOR is my preference for investors who want current execution without assuming a successful major integration. Its lower forward multiple accompanies strong earnings growth and a rapidly expanding contracted work book.
IES could deliver the greater upside if its high-margin data-center work stays strong and DBM generates enough cash to repay acquisition borrowings quickly. Evidence of that repayment, together with sustained segment margins, would strengthen the case for paying its premium. Until then, EMCOR offers a clearer relationship between today’s operating results and the price investors pay. Morgan Stanley’s 33-GW shortfall forecast raises a different question: what can supply a campus before a conventional power project is ready? Compare the two suppliers selling different routes to faster power.
Hedge Fund Resource Center