Legence Corp. (LGN): A Bull Case Theory

We came across a bullish thesis on Legence Corp. on Valueinvestorsclub.com by onodacapital. In this article, we will summarize the bulls’ thesis on LGN. Legence Corp.'s share was trading at $46.91 as of January 30th. LGN’s trailing and forward P/E were 91.88 and 36.36  respectively according to Yahoo Finance.

Legence Corp. provides engineering, installation, and maintenance services for mission-critical systems in buildings in United States. LGN presents a compelling investment opportunity driven by its large and rapidly growing data center business. The company provides engineering, installation, and maintenance services for mechanical, electrical, and plumbing systems, with a growing focus on energy efficiency and consulting.

Approximately 50% of its pro-forma business is concentrated in data centers, which grew over 60% YoY in Q3 2025, while the remaining revenue comes from life sciences, healthcare, and education verticals. Overall, the company has shown strong organic growth, with total order intake exceeding $1 billion in Q3, up more than 40% YoY, and quarterly revenue growth accelerating from 8% in Q1 to 26% in Q3. Its engineering and consulting segment generates high margins (~30%), complementing the mid-teens margins in installation and maintenance, which together constitute 70% of the business.

LGN trades at approximately 12x 2026 pro-forma EBITDA, significantly below peer multiples, which range from 14x to 20x, despite its strong growth trajectory and strategic positioning. The company benefits from Blackstone ownership, which provides preferred access to major data center investments, including QTS, Legence’s largest customer, and supports the ongoing expansion of data center infrastructure nationwide. Management guides to ~15% organic top- and bottom-line growth in 2026, which appears conservative given recent performance.

The investment case is underpinned by modest downside risk, attractive free cash flow, and potential for quick upside as the market discovers LGN post-IPO. Upside scenarios include a re-rating to peer multiples, which could deliver a ~50% stock price increase over the next few years. Even under slower growth, EBITDA expansion and recurring maintenance services provide a resilient floor, making LGN a well-positioned, undervalued play in the energy-efficient HVAC and data center sectors.

Previously, we covered a bullish thesis on EMCOR Group, Inc. (EME) by CompanyCharts in April 2025, which highlighted its strong U.S. infrastructure positioning, operational efficiency, and consistent earnings and free cash flow growth. EME’s stock price has appreciated by approximately 88.47% since our coverage. Onodacapital shares a similar perspective but emphasizes Legence Corp.’s (LGN) rapid data center growth, Blackstone-backed advantages, and undervaluation versus peers.

Legence Corp. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 37 hedge fund portfolios held LGN at the end of the third quarter which was 0 in the previous quarter. While we acknowledge the potential of LGN as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.