IES Holdings misses EPS estimates, surges on data center demand
Adjusted earnings fall short of Wall Street targets, but operating income jumps 31% amid Communications segment growth
IES Holdings reported fiscal first-quarter results that fell short of analyst earnings estimates, yet showcased robust growth driven by surging data center demand, as the Houston-based infrastructure company continues its expansion through strategic acquisitions.
The company posted adjusted earnings per share of $3.71, missing the $3.94 consensus estimate by 5.8 percent, according to its earnings announcement. Revenue of $871 million narrowly missed projections of $876 million but represented a 16 percent increase from the prior year's quarter.
Despite the earnings miss, operating performance showed significant strength. Operating income climbed 31 percent to $97.7 million, while net income surged 62 percent to $91.4 million. Diluted earnings per share reached $4.51, up from $2.72 in the same period last year.
The standout performance came from the Communications segment, where revenue jumped 51 percent to $351.9 million, fueled by accelerating data center construction activity. Operating income in that segment more than doubled to $57.4 million from $28.6 million a year earlier. The company's total backlog stood at $2.6 billion as of December 31, 2025, with $1.8 billion in remaining performance obligations.
"The demand environment for data center-related infrastructure remains exceptionally strong," the company noted in its earnings release, highlighting how its Communications and Infrastructure Solutions segments are capitalizing on the broader artificial intelligence buildout and cloud computing expansion.
Not all segments shared in the growth. The Residential division faced headwinds from a challenging housing market, with revenue declining 11 percent to $284.1 million and operating income falling to $8.9 million from $23.8 million in the prior-year quarter. The company indicated it expects continued economic challenges in the Residential segment through the winter season.
Two weeks before the earnings release, IES Holdings completed its acquisition of Gulf Island Fabrication for $192 million in cash, or $12 per share. The transaction adds Gulf Island's 450,000-square-foot fabrication facility in Houma, Louisiana to IES's Infrastructure Solutions segment, expanding the company's capacity to deliver custom-engineered solutions including generator enclosures and power distribution equipment.
"This acquisition advances our strategy to further expand our Infrastructure Solutions segment and deepen our role in building and rebuilding U.S. infrastructure," IES stated regarding the Gulf Island deal. The company anticipates strong growth opportunities in data center markets as well as energy sectors including oil and gas, with potential exposure to future nuclear power projects.
The Infrastructure Solutions segment demonstrated momentum in the quarter, with revenue rising 30 percent to $140.2 million and operating income increasing 53 percent to $35.6 million. Commercial & Industrial revenue grew 7 percent to $94.8 million, with operating income improving to $9.7 million.
Shares of IES Holdings, which have gained more than 200 percent over the past year amid the infrastructure boom, currently trade at approximately $474.61, giving the company a market capitalization of roughly $9.5 billion. The stock's price-to-earnings ratio stands at 31.65, above the industrials sector average but reflecting investor enthusiasm for the data center construction theme.
Analysts maintain a median price target of $440 on the stock, suggesting some downside from current levels. Institutional investors own 97.7 percent of shares outstanding, indicating strong conviction among large holders despite the elevated valuation multiples.
IES Holdings did not provide formal guidance in its earnings announcement, leaving investors to focus on the company's execution against its substantial backlog and its ability to integrate the Gulf Island acquisition profitably. With data center demand showing little sign of abating and infrastructure spending accelerating, the company's growth trajectory remains closely tied to the broader technology sector's capital expenditure cycle.