Will Data Center Expansion Continue to Support EMCOR's Growth?

EMCOR Group, Inc. EME continues to benefit from robust demand in the data center space. In the second quarter of 2025, the company reported record revenues of $4.3 billion, up 17.4% year over year, with a significant portion driven by network and communications projects, particularly data centers. Remaining Performance Obligations (RPOs) in this segment reached a record $3.8 billion at the end of June, indicating strong order momentum and customer confidence.

The U.S. backdrop of elevated public infrastructure spending is also proving advantageous. EMCOR is seeing healthy activity across multiple end markets, but data centers remain a standout contributor. Both Electrical and Mechanical Construction segments reported higher revenues tied to data center projects, underscoring the sector’s role in driving growth. The company highlighted that sophisticated customers in this space value the expertise in virtual design, prefabrication and labor efficiency, strengthening its competitive position.

Looking ahead, the demand trend for large-scale data center construction contracts is expected to remain elevated through the remainder of 2025 and beyond. Furthermore, the company’s RPOs and execution capabilities provide strong visibility, though contract mix and project timing may influence near-term margins. Overall, continued expansion in data centers, combined with favorable infrastructure spending, supports a positive trajectory for EMCOR’s performance.

Rising Demand for Data Centers Spurs Growth Opportunities

The expansion of digital infrastructure is opening new avenues across the construction and services space. Primoris Services Corporation PRIM and MasTec, Inc. MTZ are two companies benefiting from the growing wave of data center investment.

Primoris is sharpening its focus on large-scale infrastructure projects, with data centers becoming a key growth driver. In the second quarter of 2025, revenues rose 20.9% year over year to $1.89 billion, supported by strength in Energy and Utilities. The company is actively pursuing more than $1.7 billion of data center projects, which it views as a natural extension of the core capabilities. With backlog climbing to $11.5 billion, Primoris is positioned to capture opportunities linked to digital transformation and AI-driven capacity needs.

MasTec is also capitalizing on rising demand, particularly through fiber deployment tied to hyperscaler spending. Communications revenues surged 42% year over year in the second quarter of 2025, supported by broadband build-outs and telecom infrastructure linked to data centers. With a record backlog and strong demand for power and fiber connectivity, MasTec expects data center-related revenues to grow further in 2025, aided by rapid investment in AI, cloud and high-performance computing.

EME’s Price Performance, Valuation & Estimates

Shares of EMCOR have gained 33.6% in the past three months compared with the Zacks Building Products - Heavy Construction industry’s growth of 22.6%.

From a valuation standpoint, EME trades at a forward 12-month price-to-earnings ratio of 24.23X, up from the industry’s 21.2X.

EMCOR’s earnings estimates for 2025 and 2026 have trended upward in the past 30 days by 2% to $25 per share and 1.7% to $26.70, respectively. The estimated figures for 2025 and 2026 indicate 16.2% and 6.8% year-over-year growth, respectively.

EME’s Zacks Rank

EMCOR currently carries a Zacks Rank #2 (Buy). 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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