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

MYR Group reported record Q2 2026 revenue of $1.08 billion, up 20.1% year over year, and record backlog of $3.16 billion. Net income rose 88% to $49.9 million and EPS increased to $3.17 from $1.70, while gross margin expanded 170bps to 13.2% and EBITDA grew 53% to $85 million. The company has $460.5 million of revolver availability, acquired Valley Electric and Comet Electric to expand C&I capabilities, and benefits from rising electrical-infrastructure demand tied to data centers, AI power consumption, electrification and reshoring. MYRG shares are up 58.7% over the past year, while 2026 and 2027 earnings estimates have increased; its 0.91x forward P/S remains below the industry's 1.93x average.

Analysis

MYRG’s upside now hinges less on broad electrical-infrastructure demand than on converting a C&I-heavy awarded-work base without the normal fixed-price execution leakage. The margin step-up was aided by job closeouts and scope additions—items that are inherently lumpy—so the key underwriting question is whether acquired operations and new data-center/industrial work can sustain mid-teens gross margins rather than merely revenue growth. A modest margin normalization would matter more to EPS than another quarter of backlog growth.

The acquisitions increase exposure to local labor availability, integration costs and potentially lower-quality inherited project controls. That risk is amplified because electrical contractors compete for the same skilled craft labor; wage inflation or subcontractor scarcity can compress MYRG first on fixed-price work, while time-and-materials-heavy peers have better pass-through. EME is the higher-quality defensive alternative if the market begins discounting execution risk, while MTZ offers a more diversified infrastructure beta but less pure C&I upside.

Near term, upward estimate revisions can support a further rerating over the next 1-3 months, but the low price-to-sales comparison is not decisive: contractor valuation should be anchored to normalized operating margin, cash conversion and backlog quality, not sales. The contrarian view is that the market may already be capitalizing peak data-center construction intensity and unusually favorable closeouts; a single weak project-margin quarter could compress the premium quickly despite intact multi-year grid spending.

For 6-18 months, the structural opportunity remains credible if utility interconnection queues and hyperscale power commitments translate into awarded transmission, substation and on-site electrical work. Watch C&I book-to-bill, fixed-price mix, acquired-business margin contribution, operating cash flow versus earnings, and any rise in claims or project inefficiency language. Thesis is falsified by two consecutive quarters of gross-margin deterioration, slowing backlog conversion, or a material reduction in 2027 earnings expectations.

Key Decisions for Investors

• Initiate only a starter long MYRG after confirming the next quarterly C&I margin and cash conversion; add if gross margin holds near current levels and backlog remains stable. Target a 10-15% relative upside versus electrical-contractor peers over 3-6 months; exit on a >150bp gross-margin decline or a 2027 consensus EPS cut.
• Express the execution-quality spread as long EME / short MYRG in equal dollar amounts if MYRG materially outperforms into earnings. This isolates the risk that MYRG’s recent margin performance is non-recurring; cover if MYRG demonstrates two quarters of sustained margin and acquisition integration above plan.
• Avoid using DY as a direct hedge: its telecom-cycle exposure makes it a poor offset to MYRG’s power and C&I exposure. MTZ is a better partial short hedge only for a broad infrastructure-demand slowdown, though its diversified end markets reduce correlation.
• Set an event-driven alert around the next earnings release for fixed-price contract mix, project-inefficiency disclosures and operating cash flow. If these data are unavailable or deteriorate, treat the valuation argument as unproven rather than adding on momentum.