Key Takeaways
- Comfort Systems shares rose 9% today after UBS, KeyBanc and Oppenheimer kept their buy-equivalent ratings following Friday’s 9% post-earnings drop.
- Friday’s margin worry looks overdone: third-quarter gross margin held at 24.8%, the same as a year ago.
- Backlog reached a record $17.81 billion at Sept. 30, up from $9.38 billion a year earlier.
- On current earnings estimates, the three firms’ $1,900 to $2,000 targets imply multiples above the stock’s five-year average. Higher estimates would reduce the multiple expansion needed to reach them.
Comfort Systems USA (FIX) shares are up about 9% today (trading near $1,265) after UBS, KeyBanc and Oppenheimer stood by the stock following Friday’s post-earnings selloff.
That wins back almost all of Friday’s 9% drop, which followed a quarter that beat on both revenue and earnings.
Three Brokers Hold the Line
All three firms trimmed their targets before the open and kept their ratings:
- UBS: Buy, $1,900 from $2,225
- KeyBanc: Overweight, $1,979 from $2,125
- Oppenheimer: Outperform, $2,000 from $2,400
Even after the cuts, those targets sit 50% to 58% above the stock. UBS pointed to a record $7.4 billion of third-quarter bookings.
The Margin Scare Looks Overblown
Comfort Systems reported revenue of $3.77 billion, up 54%, and earnings of $13.91 a share. Gross margin was the worry. It slipped to 24.8% from 26.1% in the first half, which management put down to more equipment in the cost mix, $12 million of extra acquisition accounting, and big jobs still at an early stage. CFO Bill George’s retirement, announced with the results, weighed on the stock too.
But that margin starts from a high level, after years of expansion…
The third quarter’s 24.8% matched a year ago and beat every full year on that chart.
TIKR Tracks 10 Analysts on Comfort Systems USA. How Many Say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Comfort Systems USA, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Comfort Systems USA’s Analyst Ratings
The Backlog Does the Talking
Backlog hit a record $17.81 billion at Sept. 30, up from $9.38 billion a year earlier and nearly twice 2025 revenue. Analysts expect sales to more than double by 2028…
Labor is the limit, not demand. “The governor isn’t demand, the governor is really just labor,” President Trent McKenna said on Friday’s third-quarter earnings call. CFO Bill George expects same-store revenue to grow in the mid-20% range in 2027.
Comfort Systems Stock Still Trades Below Its Average
Even after today’s jump, Comfort Systems trades at about 23x forward earnings. That’s below its five-year average of 26x and less than half April’s 47x…
Getting to $1,900 or $2,000 on today’s estimates would take a multiple of roughly 34x to 36x, so earnings estimates need to rise. With a backlog nearly twice last year’s sales, I expect they will. Friday priced one softer margin quarter like a crack in the business. At 23x, that’s a buy. Fourth-quarter results early next year bring the next read on margins.
So what is Comfort Systems stock actually worth?
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Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
