Should I Buy IES Holdings (IESC)? Finance YouTuber Analysis

The YouTuber suggests IES Holdings for its electrical work in data centers, noting its communications segment's extraordinary growth and a 62% jump in total backlog. Its relatively smaller market cap of $12.6 billion allows for aggressive compounding if data center construction continues at its current pace, supported by 23% annual revenue growth and nearly tripled operating margin over five years.

“As long as that segment just keeps printing 35% plus, then hyperscaler demand is intact and the runway just extends.”

The YouTuber recommends IES Holdings, a key player in data center installations, highlighting its strong growth since the advent of AI, with operating profit doubling in two years. The company has no debt, a significant cash reserve, and actively repurchases shares, indicating strong management confidence. Its data center segment is growing at 24% annually, with further acceleration since 2023.

“Hay otra compañía muy interesante que es IS Holdings, que es quizás menos conocida, pero también es clave porque es líder en el tipo de instalaciones que hacen para data centers. Esta compañía que hemos visto que también está en máximos históricos y una valoración quizás más baja que la de Vertip, pero creciendo similar, eh tiene la parte de el segmento de comunicaciones, que es lo que sirve a los data centers, que es el 34% del negocio, es la mayoría.”

The YouTuber believes IESC is attractive due to its strong growth in revenue and earnings, outperforming competitors in the electrical construction industry. Despite a 45% correction from its highs, it trades at a lower P/E (15) compared to peers. The company benefits from tailwinds in data center construction and residential housing, and has a strong balance sheet.

“This tells us that iesc is trading for the lowest PE ratio despite it having the most historical growth and therefore I think that iesc is looking cheap relative to its peers in the electrical con construction industry and it's also looking cheap relative to its own history.”