- Record Backlog and Revenue Growth: Achieved $12 billion backlog with 67% revenue from the industrial sector, driven by data centers, and 35% same-store revenue growth in Q4.
- Historic Earnings Surge: Q4 EPS of $9.37 (+129 YoY) and full-year EPS of $28.88 (+98 YoY), with gross margin exceeding 25% for the first time.
- Modular Capacity Expansion: Modular capacity to grow from 3M to 4M sq ft by 2026 to meet demand from top customers, currently contributing 18% of business.
- Strong Cash Flow and Shareholder Returns: $1.2 billion operating cash flow in 2025, $200 million returned via buybacks (440K shares repurchased), and a near-50% dividend increase.
- Disciplined Growth and Outlook: 2026 guidance supported by $12B backlog, 16% EBITDA margin, and CapEx of 1.7% of revenues, with focus on labor management and strategic M&A readiness.
Operational Highlights
The company's operating cash flow for 2025 was $1.2 billion, and its EBITDA margin was 16%. Comfort Systems invested in share repurchases, returning over $200 million to shareholders by purchasing over 440,000 shares. The company's modular capacity is expected to increase from 3 million square feet to approximately 4 million square feet by the end of 2026, driven by demand from its largest customers.
Outlook and Growth Prospects
Comfort Systems expects continued strong performance in 2026, driven by its unprecedented backlog and strong project pipelines. Management expressed confidence in its prospects, citing its best-in-class workforce and execution capabilities. The company's growth is partly due to the increasing density of data centers, leading to more complex projects and better project economics. Analysts estimate next year's revenue growth at 12.4%, indicating a strong outlook for the company.
Valuation Metrics
With a P/E Ratio of 50.42 and an EV/EBITDA of 39.74, the market appears to have priced in significant growth expectations. The company's ROIC of 34.04% and ROE of 48.52% indicate strong profitability. The current valuation metrics suggest that the market has high expectations for Comfort Systems' future performance, and the company will need to continue delivering strong results to justify its current valuation.
Strategic Initiatives
Comfort Systems remains disciplined in taking on jobs, with a detailed process to assess labor projections and availability. The company is also focused on increasing its modular capacity to meet growing demand, particularly from its largest customers. With a strong M&A pipeline, the company is well-positioned to continue its growth trajectory, although it is being cautious in its acquisition strategy, prioritizing building for a multi-decade period.