QS Research · Michael Burry's Scion Capital analyst template · 2006
COMFORT SYSTEMS USA INC (FIX)
As of 2026-11-06 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction medium · base case -12% · downside -31% · upside +7%
The market is not missing the operating strength: TTM revenue is $12.54B, EBITDA $2.17B, FCF $2.44B and backlog $17.81B, and the 50.9% drawdown is multiple/sentiment compression rather than an operating collapse. But at the $35.60B market cap FIX still trades 15.5x EV/EBITDA and 21.8x P/E, near the top of the closest-peer range, while the 10.6x-16.8x range on TTM EBITDA gives equity value of about $24.7B-$38.2B. Using the 13.7x midpoint (10.6x + 16.8x, divided by 2) on $2.17B EBITDA = $29.7B EV; adding $2.16B cash and subtracting $145.2M debt and $315.8M leases gives about $31.4B equity, roughly -12% versus the $35.60B market cap. Downside to 10.6x is about -31% and upside to 16.8x only about +7%, so the rule is not met for a short even though the risk/reward is unattractive; I watch.
Key numbers
- Share price: $1,017.50
- Market cap: $35.60B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $12.54B
- EV / EBITDA (TTM): 15.5x
- P/E (TTM): 21.8x
- Price / book: 10.67x
The 15 boxes
- ✓ 1. Long-form business notes
Comfort Systems is a US mechanical and electrical (MEP) contractor: FY2025 revenue $9.10B split 73.3% mechanical / 26.7% electrical, performed through 50 operating units with 190 locations in 142 cities, 63.2% of it new-build installation and 36.8% renovation/maintenance/repair. Between the FY2020 and FY2025 annual reports the business roughly tripled in revenue ($2.86B to $9.10B) and shifted hard toward new construction (46.7% of FY2020 revenue vs 63.2% in FY2025) and toward technology/manufacturing end markets, with electrical's share of revenue up from 15.5% to 26.7%. Earnings are operating, not one-off: operating income went $190.7M (FY2020) to $1.31B (FY2025) while pre-tax income of $1.29B was slightly below it, and operating cash flow rose from $286.5M to $1.19B on capex of only $154.9M. The work is short-cycle project work (average contract ~$2.9M, six to nine months) on a backlog of 8,427 projects worth ~$24.17B at 12/31/2025.
- ✓ 2. Competitive advantage
A scale-and-balance-sheet advantage, not a moat. From FY2020 to FY2025 revenue roughly tripled to $9.10B, but operating income rose about 6.9x to $1.31B, lifting operating margin from ~6.7% to ~14.4% and ROE (net income / equity) from ~22% to ~42% - that is operating leverage and capital-light growth in an industry the 10-K describes as thousands of local and regional shops. The company's own edge is breadth (multi-location coverage, service range, bonding and financial strength) versus small owner-operated firms, but the same 10-K concedes price is often the deciding factor on bids, one customer was 12.8% of FY2025 revenue, and surety bonding access - not brand or switching costs - is the real gate on who can compete for work.
- ✓ 3. 10-Q takeaways
Q3 2026 was a demand-led blowout: revenue was $3.77B, up 53.7% YoY, with same-store revenue up 46.3%, and backlog reached $17.81B, up 90.0% YoY. Gross margin was flat at 24.8% in Q3 but 25.6% for 9M 2026 versus 23.6%, with Q3 2025's $15.5M bankruptcy recovery and Q1 2026's $43.1M favorable project developments noted separately from base operations. Cash conversion was strong—9M 2026 operating cash flow $2.54B and free cash flow $2.05B—while the balance sheet had no revolver borrowings and $1.01B available; buybacks were $349.1M. Management guides to high demand through 2027 but flags labor and supply-chain pressures and potential recession preparation.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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