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Reviewing a company’s long-term performance can reveal insights into its business quality. Any business can have short-term success, but a top-tier one sustains growth for years. Thankfully, Comfort Systems’s 22.2% annualized revenue growth over the last five years was incredible. This is a great starting point for our analysis because it shows Comfort Systems’s offerings resonate with customers.

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 29.6% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated. We note Comfort Systems isn’t alone in its success as the Construction and Maintenance Services industry experienced a boom, with many similar businesses also posting double-digit growth.

We can dig further into the company’s revenue dynamics by analyzing its backlog, or the value of its outstanding orders that have not yet been executed or delivered. Comfort Systems’s backlog reached $5.68 billion in the latest quarter and averaged 43.7% 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 pulled off a wonderful 31.5% year-on-year revenue growth rate, but its $1.81 billion of revenue fell short of Wall Street’s rosy estimates.

Looking ahead, sell-side analysts expect revenue to grow 12.4% over the next 12 months, a deceleration versus the last two years. Still, this projection is admirable and indicates the market is factoring in success for its products and services.

Today’s young investors likely haven’t read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.

Comfort Systems was profitable over the last five years but held back by its large cost base. Its average operating margin of 7.7% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.

On the bright side, Comfort Systems’s annual operating margin rose by 3.3 percentage points over the last five years, as its sales growth gave it operating leverage.

In Q3, Comfort Systems generated an operating profit margin of 11.2%, up 1.4 percentage points year on year. The increase was encouraging, and since its operating margin rose more than its gross margin, we can infer it was recently more efficient with expenses such as marketing, R&D, and administrative overhead.

Analyzing long-term revenue trends tells us about a company’s historical growth, but the long-term change in its 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 37.2% compounded annual growth rate over the last five years, higher than its 22.2% annualized revenue growth. This tells us the company became more profitable as it expanded.

We can take a deeper look into Comfort Systems’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, Comfort Systems’s operating margin expanded by 3.3 percentage points over the last five years. On top of that, its share count shrank by 3.5%. 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 give insight into an emerging theme or development for the business. For Comfort Systems, its two-year annual EPS growth of 43.9% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q3, Comfort Systems reported EPS at $4.09, up from $2.93 in the same quarter last year. This print beat analysts’ estimates by 2.4%. Over the next 12 months, Wall Street expects Comfort Systems’s full-year EPS of $13.07 to grow by 13.8%.

We were impressed by how significantly Comfort Systems blew past analysts’ EBITDA expectations this quarter. On the other hand, its revenue and backlog fell short of Wall Street’s estimates, sending shares lower. Overall, this quarter could have been better. The stock traded down 7.7% to $381.49 immediately after reporting.

Comfort Systems didn’t show it’s best hand this quarter, but does that create an opportunity to buy the stock right now?If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.

(Reuters) -Intel will invest more than $28 billion to construct two new chip factories in Ohio, the company said on Friday, in a latest step to build out its contract manufacturing business and better compete with Taiwan Semiconductor Manufacturing Co.

Shares of the troubled chip firm rose nearly 2% in early trading. The stock has slumped more than 55% this year.

Intel’s foundry business is central to CEO Pat Gelsinger’s turnaround strategy, as the once-chipmaking king attempts to claw back the technological edge that it lost to TSMC, the world’s largest contract chipmaker.

The big investment comes more than a month after Intel signed a multibillion-dollar deal with Amazon to build custom AI chips for the e-commerce giant’s cloud services unit. The deal was seen as a major stamp of approval to Intel’s money-losing foundry business.

The Santa Clara, California-based company said on Friday the initial phase of the project is expected to create 3,000 Intel jobs.

The chipmaker has had a tumultuous year as it suspended its dividend, slashed workforce and saw sudden resignation of a high-profile board member, while the slump in its share price threatened its place in the Dow Jones index.

(Reporting by Deborah Sophia in Bengaluru; Editing by Shilpi Majumdar)

Even if you’re just a casual investor, there’s a good chance you’re familiar with Michael Burry. He’s the contrarian hedge fund manager made famous by The Big Short, the Michael Lewis book-turned-movie that chronicled the investors who saw the 2008 collapse of the financial system early and bet accordingly.

Burry’s Scion Capital Management made $725 million for his investors by betting against mortgage-backed securities back then, and he pocketed $100 million for himself.

The hedge fund manager has since been closely followed by investors, and though he doesn’t frequently give interviews, anyone can track his moves each quarter through Scion’s 13F filings with the SEC. Burry’s recent purchases show that he’s squarely lining up behind another contrarian bet.

The Scion Capital manager now has approximately 46% of his portfolio in a trio of Chinese tech stocks. Alibaba (NYSE: BABA) made up 21.3% of his portfolio as of the end of the second quarter, followed by Baidu (NASDAQ: BIDU) at 12.4%, and JD.com (NASDAQ: JD) at 12.3%. Burry started buying those stocks in Q4 2022.

The past few weeks notwithstanding, it’s hard to find a more unloved sector than China in recent years. As you can see from the chart below, the iShares MSCI China ETF, a top China ETF, has badly underperformed the S&P 500.

The gains over the last few weeks are related to Beijing’s move to loosen lending rates and restrictions, a sign that Burry’s patience could be paying off.

He’s not alone. Billionaire fund manager David Tepper, who runs Appaloosa Management, has also been stocking up on Chinese stocks. Tepper’s top holding is also Alibaba, representing 12.2% of his holdings, and Pinduoduo parent PDD Holdings (NASDAQ: PDD) makes up another 4.2%. He also owns Baidu, the Kraneshares CSI China ETF (NYSEMKT: KWEB), JD.com, and KE Holdings (NYSE: BEKE), which represent a combined 6.6% of his portfolio.

All totaled, nearly a quarter of Tepper’s holdings are Chinese stocks, and he first started buying the sector, starting with Alibaba, in Q2 2022.

Should you follow these top investors into China? Let’s take a look at one reason to buy Chinese stocks and one reason not to.

Plenty of top investors seem to think the U.S. stock market, as represented by the S&P 500, is overvalued. Even Warren Buffett, one of the biggest cheerleaders for U.S. stocks in history, has been a net seller this year, instead piling into Treasuries.

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The union representing workers on strike against troubled aerospace firm Boeing (BA) on Thursday reminded its members that they need to stick together in order to get what they want.

Sixty-four percent of workers represented by International Association of Machinists and Aerospace Workers (IAM) local 751 on Wednesday voted against Boeing’s latest deal, which offered a 35% raise but failed to meet the workers’ broader demands. Two key sticking points have been the size of the raise — the IAM has been seeking a 40% wage increase — and the restoration of Boeing’s pension, which was cut as a benefit for new employees a decade ago.

Machinists have been divided over the contract, with some arguing that they should be “grateful” for the deal and “vote accordingly,” while others want to stick out for that pension benefit,” The Seattle Times reported.

Rachel Sarzynski, a team lead on Boeing’s 777, told the Times that “some people are desperate” and just want to get back to work and get paid again. Union members have received $250 per week from the strike fund after the walkouts entered its third week — a major pay cut for many employees. Sarzynski added that Boeing’s latest offer has “absolutely divided people.”

The IAM on Thursday evening seemed to acknowledged that divide, reminding its members that no one “deserves to be bullied or disrespected” because of how they voted on the deal. “Bullying” fellow members, the union added, is “unacceptable and vile.”

“Each one of us made a choice, using our voice, deciding what was right for our families. That power to choose, the right to choose, is at the core of everything we stand for,” the IAM said in a statement. “Respect. Fairness. A future that we decide, not one handed down to us from corporate boardrooms. “

As for the strike negotiations, the latest offer came partially after an intervention from Acting Secretary of Labor Julie Su, which pushed both sides to return to the bargaining table.

Boeing in a statement said it was “disappointed” by Wednesday’s results; its CEO had told investors this week the company is “feverishly” working toward a solution. The IAM has said it will work to return to the negotiating table.

The strike has added to Boeing’s litany of problems, which were renewed this year after a piece of fuselage fell off a plane in January. The Federal Aviation Administration (FAA) imposed a continuing production rate cap so Boeing could address quality-control issues, which meant that the company has been sending billions of dollars in cash out the door for a while without the lost income.

The strike paused work on many of the plane models making up Boeing’s order backlog. Now, it has plans to lay off 10% of its workforce and raise tens of billions of dollars in cash to fortify its coffers amid lost revenue, but securing that funding was in part tied to ending the strike.

The company’s much-needed investment-grade credit rating hangs on by a thread, and losing it would make the path to recovery steeper and more expensive should Boeing need to borrow more money along the way. Fitch Ratings said last week that Boeing’s cash-raising actions “support liquidity amidst continued operational challenges” — but only if Boeing can reach an agreement for its machinists to be back on the job by the end of the year.

—Melvin Backman contributed to this article

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