HVAC and electrical contractor Comfort Systems (NYSE:FIX) reported revenue ahead of Wall Street’s expectations in Q4 CY2025, with sales up 41.7% year on year to $2.65 billion. Its GAAP profit of $9.37 per share was 38.7% above analysts’ consensus estimates.
Comfort Systems (FIX) Q4 CY2025 Highlights:
- Revenue: $2.65 billion vs analyst estimates of $2.34 billion (41.7% year-on-year growth, 13% beat)
- EPS (GAAP): $9.37 vs analyst estimates of $6.75 (38.7% beat)
- Adjusted EBITDA: $464 million vs analyst estimates of $346.5 million (17.5% margin, 33.9% beat)
- Operating Margin: 16.1%, up from 12.1% in the same quarter last year
- Free Cash Flow Margin: 15.2%, up from 9.2% in the same quarter last year
- Backlog: $11.94 billion at quarter end, up 99.3% year on year
- Market Capitalization: $46.44 billion
Brian Lane, Comfort Systems USA’s Chief Executive Officer, said, “We are deeply grateful for the amazing performance of our teams across the country. Their commitment and dedication continue to deliver excellent results for our customers, provide increasing opportunities for our employees, and bring crucial services to our communities. Careful discipline and great execution resulted in quarterly EPS that doubled compared to the same quarter last year. In addition to increased revenue and earnings, we also achieved over $400 million of quarterly cash flow.”
Company Overview
Formed through the merger of 12 companies, Comfort Systems (NYSE:FIX) provides mechanical and electrical contracting services.
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Luckily, Comfort Systems’s sales grew at an incredible 26.1% compounded annual growth rate over the last five years. Its growth surpassed the average industrials company and shows its offerings resonate with customers, a great starting point for our analysis.
We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Comfort Systems’s annualized revenue growth of 32.2% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.
Comfort Systems also reports its backlog, or the value of its outstanding orders that have not yet been executed or delivered. Comfort Systems’s backlog reached $11.94 billion in the latest quarter and averaged 47.6% year-on-year growth over the last two years. Because this number is better than its revenue growth, we can see the company accumulated more orders than it could fulfill and deferred revenue to the future. This could imply elevated demand for Comfort Systems’s products and services but raises concerns about capacity constraints.
This quarter, Comfort Systems reported magnificent year-on-year revenue growth of 41.7%, and its $2.65 billion of revenue beat Wall Street’s estimates by 13%.
Looking ahead, sell-side analysts expect revenue to grow 12% over the next 12 months, a deceleration versus the last two years. Still, this projection is healthy and suggests the market is forecasting success for its products and services.
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Operating Margin
Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.
Comfort Systems has managed its cost base well over the last five years. It demonstrated solid profitability for an industrials business, producing an average operating margin of 10.2%. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.
Analyzing the trend in its profitability, Comfort Systems’s operating margin rose by 8.3 percentage points over the last five years, as its sales growth gave it immense operating leverage.
In Q4, Comfort Systems generated an operating margin profit margin of 16.1%, up 4 percentage points year on year. The increase was encouraging, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Comfort Systems’s EPS grew at an astounding 47.8% compounded annual growth rate over the last five years, higher than its 26.1% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
We can take a deeper look into Comfort Systems’s earnings to better understand the drivers of its performance. As we mentioned earlier, Comfort Systems’s operating margin expanded by 8.3 percentage points over the last five years. On top of that, its share count shrank by 3.4%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.
Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.
For Comfort Systems, its two-year annual EPS growth of 79.1% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.
In Q4, Comfort Systems reported EPS of $9.37, up from $4.09 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Comfort Systems’s full-year EPS of $28.90 to grow 6.7%.