We came across a bullish thesis on Everus Construction Group, Inc. (ECG) on Substack by Unemployed Value Degen. In this article, we will summarize the bulls’ thesis on ECG. Everus Construction Group, Inc. (ECG)’s share was trading at $37.09 as of March 31st. ECG’s trailing and forward P/E were 13.20 and 15.02 respectively according to Yahoo Finance.
An electrical engineer inspecting a wiring accessories product.
Everus Construction Group (ECG) presents a compelling investment opportunity following its spin-off from MDU Resources in November. The market has yet to fully price in ECG’s potential, especially given the broader weakness in small-cap stocks since its debut. Despite being part of the traditionally low-margin engineering sector, ECG has strong tailwinds that set it apart. The company specializes in power grid expansion and maintenance, an industry poised for long-term growth amid increasing electricity demand driven by reshoring and the AI revolution. Unlike the stagnant energy consumption trends of the past two decades, where factory shutdowns offset population growth, the current era requires a major infrastructure buildout, positioning ECG for sustained expansion.
ECG’s financials further support its bullish case. It currently trades at a market cap of $1.8 billion with $2.8 billion in 2024 revenue and guidance for $3.0–$3.1 billion in 2025 revenue. Backlogs, a key indicator of future growth, are up 38% year over year, signaling strong demand for its services. Comparisons to industry peer Construction Partners Inc. (ROAD) highlight the relative undervaluation of ECG. ROAD, despite operating in the same sector with similar operating margins, trades at 2.0x sales and a lofty 66x price-to-earnings ratio, while ECG remains significantly cheaper. Given that engineering firms often trade at 1.5x to 2.0x price-to-sales ratios, ECG’s current valuation appears misaligned with its growth prospects. If ECG were to trade at 1.5x sales, its stock could reach $102, while a 2.0x multiple would push it to $136—substantial upside from its current $36.18 price.
Insider activity also provides a positive signal. The company has seen multiple insider purchases, notably from its CFO. Unlike CEOs, who may be naturally optimistic, CFOs are typically more cautious, making their purchases a strong vote of confidence in ECG’s future. The company’s clean balance sheet, with only $321 million in debt, and its projected 2025 EBITDA of $210–$225 million further strengthen its financial stability. Moreover, ECG has emphasized growth through acquisitions as a top priority, and with management targeting a specific leverage ratio, an additional $200 million in acquisitions is likely in the near future.
Everus Construction Group, Inc. (ECG) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 39 hedge fund portfolios held ECG at the end of the fourth quarter which was 0 in the previous quarter. While we acknowledge the risk and potential of ECG as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ECG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.