LMB

We rate Limbach Holdings, Inc. (LMB) as a Reduce with a composite score of 45.8/100 at a current price of $91.74. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in quality (60th percentile) and momentum (36th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (18th percentile) and value (31th percentile) tempers our overall conviction. We assign a Narrow Moat rating (56/100), High uncertainty, and Poor capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs; balance sheet deleveraging progress; sustainability of the current growth rate. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Limbach Holdings, Inc. holds a top-quartile position (#0 of 50) within the Construction sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 45.8/100 places it at rank #2658 in our full 7,333-stock universe. At $1.1B in market capitalization, Limbach Holdings, Inc. is a small-cap player in the Construction space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue is growing at 51%, though momentum at the 36th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 27% (+3.0pp vs sector) narrow to operating margins of 7% (-0.2pp vs sector) and net margins of 5.9%, yielding a gross-to-net conversion rate of 22%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.

At a current price of $91.74, Limbach Holdings, Inc. is trading at a premium to fundamental value. Our value factor score of 31/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The premium valuation implies the market is pricing in significant future growth or quality improvements that are not yet fully reflected in current fundamentals.

The stock currently trades at a P/E of 33.4x (a 74% premium to the sector median of 19.1x), EV/EBITDA of 26.7x (at a premium), P/B of 6.3x, P/S of 1.9x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis partially supports given strong quality metrics.

We assign a High uncertainty rating to Limbach Holdings, Inc.. Key risk factors include significant leverage (125% debt-to-equity), below-average price stability (34th percentile). The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: significant leverage (125% debt-to-equity); below-average price stability (34th percentile). Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 34th percentile and quality factor at the 60th percentile provide a quantitative summary of the overall risk landscape.

We identify limited risk mitigants at this time, which contributes to our high uncertainty assessment. Investors should monitor for improvement in balance sheet metrics, margin stability, and business predictability that could warrant a downgrade in our risk assessment over time.

We rate Limbach Holdings, Inc.'s capital allocation as Poor. Key concerns include suboptimal returns on capital. Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — Limbach Holdings, Inc. significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, Limbach Holdings, Inc. receives a Reduce rating with a composite score of 45.8/100 (rank #2658 of 7,333). Our quantitative framework assigns a Narrow Moat (56/100, trend: stable), High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 36/100.

Our analysis does not support a constructive view on Limbach Holdings, Inc. at this time. The combination of the current quantitative profile, high uncertainty, and poor capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.