Small Cap Spotlight

Comfort Systems USA: Feel the warmth

SMALLCAP MARKETPLACE
Paul Rolfes | Sep 02, 2008 6:20am EDT
Rating: Unrated

Investors might become overheated when they stumble across the five-year stock performance of Comfort Systems USA (NYSE:FIX).

Comfort Systems has risen some 300% in the past five years, but a somewhat cooler 12.5% over the last three months; 17.3% year-to-date. Considering its business line, the weak American economy and price run-up, is it too late to feel the warmth?

The 91-year-old Houston company sells commercial heating, ventilation and air conditioning systems, along with building-automation controls.

Comfort Systems has 74 local operations in 59 cities, primarily east of the Mississippi and in Puerto Rico. Its local presence is a little sparse in the western half of the United States, but it has been aggressively buying companies to expand. One of its most-recognized units is Atlas Comfort Systems, a 60-year-old mechanical contractor that recently has been an underperformer.

Comfort Systems markets itself as a single source in what remains a fragmented industry, filling in the gaps in its nationwide network through acquisitions to take on its HVAC competitors, which are mostly privately held.

Following release of upbeat second-quarter results, analysts following Comfort Systems retained a fairly positive outlook, with two of the six surveyed by Thomson Reuters ranking the stock a “buy,” and the other two at “hold.” Stephens Inc.’s Matt Duncan did cut his rating to “equal weight” from “overweight” on fears that the residential construction malaise will take a firmer hold over commercial . . .

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