Non-Residential Construction Update: July is annual revision month; steady trends in May, but tougher comps on now higher 2024-2025

Research evidence excerpt

Non-Residential Construction Update: July is annual revision month; steady trends in May, but tougher comps on now higher 2024-2025

Valuation Method and Risk Statement

The primary risks to the E&C and Machinery sector include potential declines in commodity

prices (particularly oil), slowing US and global economic activity, weaker than expected

industrial and non res construction markets and higher raw material costs. Other risks to the

E&C sector include failure to execute on backlogs/cost overruns on fixed price contracts,

potential for constrained growth due to rising construction costs, and labor availability. Our

company price targets are based on P/E and EV/EBITDA methodologies. The Electrical

Equipment and Multi Industry sector faces a broad range of risks. It is cyclical in nature with

exposure to the underlying cycles inherent in everything from aviation, auto, trucking and

trains to construction and consumer electronics to mining, power, oil and gas and more

depending on the specific stock. EEMI companies are subject to risks associated with

unexpected changes in the underlying global macro environment, currency and interest rate

movements, commodity price inflation as well as company-specific execution, M&A,

integration, and changes in the competitive or regulatory environment. These changes can be

in the form of product technology (e.g., solar, energy storage, electric vehicles), e-commerce

and other digital disruption and/or channel disintermediation. Capacity and related pricing

pressures are also a risk through the cycle. Finally, these multinational companies are subject

to additional uncertainty due to pending tax and regulatory policy changes taking place in the

United States and internationally. We set our Electrical Equipment and Multi Industry 12-