FIX Delivers Robust EPS Growth: What's Driving the Margin Upside?

Comfort Systems USA FIX delivered a stellar second-quarter 2025, posting EPS of $6.53, up a striking 75% year over year and beating estimates by a wide margin. But beyond the headline number, the real story lies in the company’s expanding margins, driven by a combination of smart project selection, operational excellence and favorable end-market trends.

Gross margin expanded to 23.5%, up from 20.1% last year, fueled by notable gains across both Mechanical and Electrical segments. Mechanical margins rose to 22.9%, while Electrical hit 25.3%. This margin strength reflects disciplined bidding, efficient project execution and a strategic focus on high-value, technically complex work, particularly in the technology and industrial sectors, which now account for more than 60% of revenues.

Another key contributor is FIX’s growing modular business, which offers faster, cost-efficient delivery of large-scale projects like data centers. With modular revenues now comprising 18% of total sales and expansion efforts underway, this high-margin segment is poised to be a long-term tailwind.

Importantly, FIX is not relying solely on price gains. The company credits innovation and productivity improvements, especially at the field level, for enabling better cost control and stronger customer value. Service revenues, too, grew 10%, providing stable, recurring margin support.

With a record $8.1 billion backlog, disciplined project intake and strong execution, FIX has set a high bar for operational performance. As long as it continues to focus on complexity-rich work and modular innovation, margin expansion may remain a durable theme.

How FIX Stacks Up Against Key Competitors in Margin Expansion

Comfort Systems faces competition from players like EMCOR Group EME and APi Group APG, both of which also benefit from demand in high-growth sectors like data centers, healthcare and infrastructure.

EMCOR, like FIX, delivered strong EPS growth recently, aided by solid execution and exposure to high-margin service work. However, FIX’s deeper push into modular construction gives it an edge in speed, scalability and cost efficiency, especially appealing to tech clients.

Meanwhile, APi Group has been aggressive in expanding its safety and specialty services platform. While APG enjoys strong recurring revenue streams, its margins remain lower compared with FIX, partly due to a heavier reliance on M&A and integration complexities.

Both peers are credible players, but FIX’s blend of operational execution, margin discipline and modular innovation positions it as a standout in a sector seeing increasing demand for complexity-driven construction solutions.

FIX’s Price Performance, Valuation and Estimates

Comfort Systems stock has gained 73.3% in the past three months, outpacing the industry and the S&P 500’s rise of 26.8% and 15.1%, respectively.

Price Performance
 

The stock is currently trading at a premium compared with the industry peers, with a forward 12-month price-to-earnings ratio of 34.56X.

P/E (F12M)

Comfort Systems’ earnings estimates for 2025 and 2026 have remained stable in the past 60 days.

The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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