EMCOR (EME) Increases Share Buyback Program By $200 Million

EMCOR Group, Inc. (NYSE:EME) continues to reward its shareholders through share buybacks. The company’s board of directors authorized an additional $200 million for the purchase of shares of its outstanding stock under the current share repurchase program.

The share repurchase authorization will be effective immediately and is an addition to the company’s previous authorization of $200 million. Notably, the previous authorization had $158.5 million remaining authorized and available as of Dec 31, 2019.

Since the inception of the program on Sep 26, 2011 through Dec 31, 2019, EMCOR repurchased 15.9 million shares of its outstanding common stock for $791.5 million under its share repurchase program.

The company announced that it has entered into a $1.6-billion credit agreement with a syndicate of banks. The credit agreement, which matures in March 2025, includes a $1.3-billion revolving credit facility and $300 million term loan.

It intends to use the proceeds of the term loan to refinance existing indebtedness, pay transaction fees and for other general corporate purposes. The revolving credit facility is expected to be utilized for working capital and other general corporate needs.

EMCOR executes a balanced capital allocation strategy via utilizing its healthy balance sheet to pursue strategic acquisition opportunities, and returning capital to its shareholders through share repurchases and dividends. In 2018 and 2019, it returned approximately $253 million in cash to its shareholders through dividends and share repurchases. In 2020, the company’s capital allocation strategies remain the same.

Zacks Rank, Earnings Projections and Price Performance

In a year’s time, the stock has rallied 9.2% against the industry’s decline of 12.4%. EMCOR — which shares space with MasTec, Inc. (NYSE:MTZ) , Dycom Industries Inc. (NYSE:DY) and Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) in the Zacks Building Products - Heavy Construction industry — currently has a Zacks Rank #2 (Buy). It is poised to gain from strong project execution across the business, cost discipline and shareholder-friendly policies. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Buoyed by favorable project mix and the assumption that the current market conditions will continue, EMCOR provided strong earnings as well as revenue guidance. It projects revenues for 2020 in the range of $9.5-$9.7 billion. The company expects earnings within $5.60-$6.30 per share. Importantly, it anticipates robust project pipeline and sustained growth in the non-residential construction market in 2020.

Earnings estimates for the current year have increased 0.2% over the past seven days. Currently, the Zacks Consensus Estimate for the bottom line is pegged at $5.95 for 2020.

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