MYR Group Gains 59% in a Year: Time to Buy, Sell or Hold the Stock?

MYR Group reported record Q2 2026 revenue of $1.08B, up 20.1% year over year, and a record $3.16B backlog, led by 41.5% C&I revenue growth. Gross margin expanded 170bps to 13.2%, while operating profit rose 71%, net income increased 88% to $49.9M, and EPS climbed to $3.17 from $1.70. Consensus 2026 earnings now imply 61.2% growth, supported by acquisitions and infrastructure, data-center and AI-driven power-demand tailwinds; MYRG trades at 0.91x forward sales versus the industry's 1.93x.

Analysis

The investable question is whether MYRG's recent margin step-up is a new operating floor or a peak benefit from favorable closeouts and project scope changes. Its expanding C&I mix can support faster growth, but fixed-price work embeds labor availability, wage inflation and execution risk; a modest reversal in job closeouts could disproportionately reduce EPS because overhead is being built ahead of revenue. The next two quarterly margin prints—not backlog alone—will determine whether the valuation discount closes or persists.

Relative to EME, MYRG offers more operating leverage to incremental electrical-construction demand and could produce the larger estimate-revision cycle over the next 1-3 months. However, EME's premium likely reflects greater scale, customer diversification and a more established record of protecting margins through cycles; MYRG should not be valued on sales multiples without adjusting for this execution dispersion. Valley Electric and Comet Electric create cross-selling potential, but purchase accounting, integration costs and acquired-project quality are the near-term swing factors.

The consensus appears too quick to equate data-center power demand with contractor earnings durability. Grid interconnection delays and utility capital-budget timing can defer T&D conversion even where end demand is robust, while data-center projects are concentrated among a small number of sophisticated buyers with procurement leverage. Over 6-18 months, electrical contractors with scarce labor, regional utility relationships and ability to shift toward time-and-materials work should gain share; MYRG must demonstrate that the acquired footprint improves those attributes rather than merely adds low-margin volume.

Key Decisions for Investors

• Initiate a starter long MYRG only on post-earnings weakness or after confirmation that gross margin holds above 12.5% for a second consecutive quarter; target a 15-20% return over 6-12 months from estimate revisions and partial valuation convergence, with exit/reassessment if margin falls below 11.5% or C&I backlog declines sequentially.
• Use a 3-6 month pair trade: long MYRG / short EME in equal dollar amounts for investors seeking a higher-beta electrical-infrastructure expression. The thesis is MYRG's greater earnings-revision leverage; stop out if MYRG's next reported operating margin trails EME's trend by more than 200 bps or integration costs materially reset guidance.
• Do not chase a broad long DY or MTZ solely on read-through. DY is more exposed to communications/network deployment and MTZ has different energy and civil exposures; treat any sympathy move as a potential short-term fade unless their own bookings and margin guidance validate comparable electrical-infrastructure demand.
• Set an event watch for the next MYRG earnings call: quantify fixed-price contract mix, acquired backlog margin, labor/subcontractor inflation and conversion of T&D bids into awarded work. A guidance increase driven by recurring productivity and time-and-materials activity is actionable; one driven primarily by closeouts is not.