MYR Group Announces 2025 Results, Testing High Valuation Amid Project Risk

What happened

MYR Group announced its fourth-quarter and full-year 2025 financial results on February 25, 2026, capping a year where its stock rose 59% to $235.44. The DeepValue master report frames MYR as a thin-margin electrical contractor now priced at 37x P/E, embedding expectations of durable 4-5% operating margins and strong free cash flow. In 2024, the company suffered a 4.4% gross margin hit from project estimate changes, leading to a quarterly EPS loss, but rebounded in 2025 with T&D and C&I margins improving to 8.0% and 5.6%, respectively. This announcement will reveal whether that recovery reflects structural execution improvements or merely favorable project mix and working-capital timing in a volatile, percentage-of-completion business. Investors must look beyond the positive narrative to assess if MYR can sustain margins without recurring losses, given its high valuation and cyclical exposure.

Implication

The full-year results will indicate if MYR can consistently achieve operating margins above 4% and annual free cash flow near $150M, as assumed in its elevated valuation. Any resurgence of project estimate changes or margin compression below 3% would signal ongoing execution risks, potentially driving the stock toward the $150 bear case. Secular tailwinds from grid modernization and data centers support volume, but regulatory delays and competitive bidding limit pricing power, making earnings volatility a persistent threat. Capital allocation, including share repurchases, must be disciplined to avoid straining liquidity if project losses recur, as the balance sheet offers only moderate downside protection. Overall, the implication is a cautious stance: unless results confirm a structural shift to higher profitability, the risk-reward skews toward trimming or exiting above $230, with a more attractive entry near $170.

Thesis delta

The announcement of 2025 results does not materially shift the DeepValue thesis, which already anticipates a recovery with a base case value of $190 assuming 3-4% margins. If the results show consolidated operating margins sustaining above 4.5% and free cash flow exceeding $150M, it could bolster the bull case toward $250, but this requires several more quarters of validation. Conversely, any indicators of renewed estimate-change drag or margin weakness would reinforce the bear case and the 'Potential Sell' rating, emphasizing the need for proof of execution discipline.