FIX's M&A Discipline Holds Firm: Can it Fuel Long-Term Growth?

Comfort Systems USA, Inc. (FIX) continues to maintain a disciplined but active approach to acquisitions in 2025, supported by a strong balance sheet. While recent deal activity has moderated compared with prior years, the company remains focused on identifying strategic opportunities that align with long-term growth.

In the first quarter of 2025, Comfort Systems acquired Century Contractors, a Charlotte-based mechanical contractor expected to contribute approximately $90 million in annual revenues. The company emphasized that while it is being selective, acquisitions remain a key part of the strategy, particularly in areas that strengthen end-market capabilities and deepen regional presence. Comfort Systems also continues to evaluate additional opportunities, indicating Mergers and Acquisitions (M&A) as a meaningful priority in its capital allocation framework.

The company ended the first quarter with more than $130 million in net cash, despite returning $92 million to its shareholders via share repurchases and funding $80 million in acquisition-related earn-outs. Comfort Systems continues to prioritize capital deployment toward high-conviction acquisitions and shareholder returns. The company expects continued support from solid project execution and a record $6.9 billion backlog, as of March 31, 2025.

With a history of successful integrations and strong liquidity, Comfort Systems is well-positioned to pursue strategic acquisitions as market opportunities arise. Management’s continued focus on quality targets over deal volume suggests that the company’s M&A discipline is not a pullback, but a measured approach to long-term value creation.

Other Industry Players Advancing Growth Through Strategic Acquisitions

Sterling Infrastructure, Inc. (STRL) and EMCOR Group, Inc. (EME) are among the key players actively pursuing targeted acquisitions to expand their reach in critical infrastructure markets and support long-term performance.

Sterling continues to strengthen its E-Infrastructure platform through strategic acquisitions aimed at expanding capabilities in high-growth, mission-critical sectors. On June 17, 2025, the company announced its agreement to acquire CEC Facilities Group, a specialty electrical and mechanical contractor based in Irving, TX, for $505 million.

The acquisition, expected to close in the third quarter, will expand Sterling’s presence across Texas and other key markets while enhancing its portfolio of complex electrical solutions for data centers and semiconductor facilities. CEC’s strong backlog and end-to-end service offerings are expected to unlock cross-selling potential and support Sterling’s long-term return on invested capital goals.

EMCOR is also leveraging acquisitions to expand its scale and capabilities, particularly across high-demand verticals like data centers, healthcare and water infrastructure. The company’s acquisition of Miller Electric, finalized before the first quarter of 2025, has already contributed $183.1 million in revenues and $12.7 million in operating income. Miller Electric also added approximately $1 billion in remaining performance obligations, bolstering EMCOR’s total RPOs to $11.75 billion as of March 31, 2025, up 28.1% year over year. EMCOR’s acquisition strategy remains focused on small, private companies with proven operational leadership and market expansion potential, supporting both organic and inorganic growth.

FIX’s Price Performance, Valuation and Estimates

Comfort Systems stock has gained 56.4% in the past three months, outpacing the industry and the S&P 500’s rise of 18% and 18.1%, respectively.

The stock is currently trading at a discount compared with the industry peers, with a forward 12-month price-to-earnings ratio of 26.55X.

Comfort Systems’ earnings estimate for 2025 and 2026 has trended upward in the past 60 days to $19.28 and $20.41 per share, respectively. The estimated figures for 2025 and 2026 indicate 32.1% and 5.8% year-over-year growth, respectively.

Comfort Systems currently holds 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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