Can Comfort Systems Sustain Growth as Data Center Demand Surges?

Comfort Systems USA FIX is riding a powerful wave of demand for data-center infrastructure, and its first-quarter 2025 results underscore that momentum. The company reported record earnings per share of $4.75, up more than 75% year over year, and revenues jumped 19% to $1.83 billion. This growth is attributable to advanced technology projects, particularly data centers and semiconductor facilities, which accounted for 37% of total revenues, up sharply from 30% a year ago.

This pivot toward high-tech infrastructure has helped push Comfort Systems’ backlog to a record $6.9 billion, with the same-store backlog rising both sequentially and annually. Management continues to see robust booking trends across its mechanical and electrical segments, and large, complex jobs in the data and compute economy are playing a central role.

However, tariff-related cost pressures and potential volatility in hyperscaler capital expenditures pose a risk to margins and visibility. While management sees no signs of a slowdown yet, it acknowledges the macro uncertainties. The company’s scale, diversification across institutional and commercial markets, and disciplined project selection help mitigate some of that risk.

Notably, Comfort Systems’ operating margins hit 11.4% in the quarter, a record for what is typically a seasonally weaker quarter. This suggests execution strength even as industry volatility looms. While comparables will tighten in the back half of 2025, continued strength in technology, healthcare and institutional sectors could offer stability.

Comfort Systems has also invested heavily in modular construction capacity, which could further support execution efficiency as demand for speed and scalability rises in data-heavy sectors. With its balance sheet strengthened and share repurchases ongoing, the company is in a strong financial position. If data-center investment remains resilient, Comfort Systems looks well-positioned to capture continued upside in 2025 and beyond.

Other Industry Players Poised to Benefit From Data Center Growth

EMCOR Group, Inc. EME and MasTec, Inc. MTZ are among the key competitors positioned to capitalize on the rising demand for data-center infrastructure.

EMCOR’s U.S. Construction segment continues to show strong momentum, driven by growth in electrical and mechanical construction activities. During the first quarter of 2025, revenues from the U.S. Electrical Construction and the U.S. Mechanical Construction segments grew year over year by 42.3% and 10.2%, respectively. Increased demand in data centers, healthcare and infrastructure, along with the company’s strategic expansion and project execution capabilities, supported this strength.

Furthermore, public infrastructure spending in the United States remains strong, providing meaningful support for EMCOR. Sustained demand for data-center construction within the network and communications sector is expected to offer solid growth visibility in 2025 and beyond.

MasTec is gaining strong traction from the rapid expansion of data-center development, which is driving demand for power infrastructure and fiber connectivity. The surge in artificial intelligence, cloud computing and high-performance data storage is fueling significant investments in new facilities, creating substantial growth opportunities. MasTec is well-positioned to benefit as companies prioritize the swift deployment of digital infrastructure to meet rising technological demands.

FIX’s Price Performance, Valuation and Estimates

Comfort Systems stock has risen 8.1% in a month against the Zacks Building Products - Air Conditioner and Heating industry’s decline of 1.8%. 

Fix’s current valuation looks promising for investors. The stock is currently trading at a discount compared with the industry peers, with a forward 12-month price-to-earnings ratio of 25.36X.

Comfort Systems’ earnings estimates for 2025 and 2026 have trended upward in the past 30 days by 1.1% to $19.28 per share and 0.7% to $20.41, respectively. The estimated figures for 2025 and 2026 indicate 32.1% and 5.8% year-over-year growth, respectively.

Comfort Systems currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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

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