Legence Corp. (LGN)

Price$53.20Cached quoteAs of 2026-09-04 16:23 UTC

AI: Fair-priced

Price checkRapid growth supports the valuation, but thin margins and acquisition risk prevent a clear bargain.

Legence's market value is about $5.6 billion and enterprise value, which adds net debt, about $6.5 billion. Against management's raised 2026 adjusted earnings before interest, taxes, depreciation and amortization guidance of $565-$585 million, that is roughly 11 times the midpoint. Trailing free cash flow, meaning cash left after operating and capital spending, is around $320 million, implying about 20 times enterprise value. Those multiples are reasonable for rapid growth, but not a deep bargain given thin margins and acquisition risk.

Big pictureBacklog and organic growth are exceptional, though data-center construction makes results more project-driven than recurring.

Second-quarter revenue reached $1.26 billion, up 111%, and still grew about 60% excluding the Bowers acquisition. Backlog and awarded contracts doubled to $5.67 billion, providing unusually strong future-work visibility. Data centers and technology are a major driver, alongside healthcare, education and government projects. The weakness is economic quality: gross margin fell to 17.4% from 21.5% as the mix shifted toward installation work. Backlog is also not guaranteed revenue and can be delayed, resized or completed at different margins than initially expected.

Business strengthCash generation is improving, but leverage, stock compensation, and acquisition shares reduce financial flexibility.

The supplied history shows roughly $292 million of cash and $1.20 billion of debt at June, while management reports adjusted net leverage near 1.5 times when including Bowers earnings. First-half operating cash flow was about $194 million against roughly $42 million of capital spending, but stock compensation approached $96 million, reducing the quality of that cash generation. Shares outstanding also increased about 16% during 2025, and the Bowers acquisition added approximately 2.55 million shares, so growth has come with meaningful dilution.

What could change the storyContinued margin expansion could create upside, while slower data-center work would quickly expose valuation risk.

Management raised 2026 revenue guidance to $4.7-$4.8 billion and adjusted operating cash-profit guidance to $565-$585 million after the strong second quarter. The bull case is that the $5.67 billion backlog converts smoothly while acquisition integration and scale lift margins. The bear case is that data-center construction slows or lower-margin installation work dominates the mix. If normalized annual operating cash profit fell toward $400 million, today's enterprise value would represent roughly 16 times that figure, considerably less attractive for a leveraged construction-services business.

AI: News

Second-quarter margin concernRecord growth and higher guidance were offset by falling gross margins, prompting a sharp negative market reaction.

On August 13, Legence reported record revenue of $1.26 billion, adjusted operating cash profit of $154.6 million and backlog of $5.67 billion, while raising full-year guidance substantially. Yet reported gross margin fell to 17.4% from 21.5%, partly because lower-margin installation work became a larger share of revenue. Shares fell about 8% that session. The timing is consistent with investors focusing on margin quality despite exceptional growth, though the price move cannot establish a single cause.

First-quarter growth surpriseEarlier record growth also produced a selloff as investors questioned margins despite sharply higher guidance.

On May 14, Legence reported first-quarter revenue of $1.04 billion, up 105%, with growth of about 57% excluding Bowers. Backlog doubled to $5.38 billion and management raised annual revenue and profit guidance. However, gross margin declined to 17.9% from 22.1%, including weaker Engineering and Consulting margins. Shares closed about 11% lower that day. The reaction suggests the market was demanding not only rapid expansion but evidence that the new revenue mix could preserve profitability.

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Revenue

2022

2023

2024

2025

Net income

2022

2023

2024

2025

Free cash flow

2022

2023

2024

2025

Total cash / debt

CashTotal debt

2023

2024

2025

Financial statements

	2025	2024	2023	2022
Revenue	$2.55B	$2.10B	$1.62B	$1.25B
Gross profit	$535.9M	$430.8M	$315.1M	$233.7M
Gross margin	21.01%	20.53%	19.51%	18.75%
Operating expenses	$474.3M	$360.4M	$304.9M	$224.6M
Operating income	$61.6M	$70.4M	$10.3M	$9.1M
Operating margin	2.41%	3.35%	0.64%	0.73%
EBITDA	$161.9M	$167.5M	$90.5M	$69.2M
EBITDA margin	6.35%	7.98%	5.60%	5.55%
Net income	−$59.8M	−$28.6M	−$46.0M	−$82.3M
Net profit margin	−2.34%	−1.36%	−2.85%	−6.60%
Basic EPSper basic share	-$0.57	-$0.52	-$0.83	-$0.81
Diluted EPSper diluted share	-$0.57	-$0.52	-$0.83	-$0.81

Review official source filings ↗

Owners

Reported shareholders

Reference date Jun 30, 2026

25.33%of listed shares

Blackstone Inc.19.48M shares · Jun 30, 2026

View holders

Top 20 reported holders of LGN
Holder	% owned
Blackstone Inc.	25.33%19.48M shares
BlackRock, Inc.	5.88%4.52M shares
Jupiter Topco LLC	3.75%2.88M shares
FRANKLIN RESOURCES INC	3.73%2.87M shares
VANGUARD PORTFOLIO MANAGEMENT LLC	3.34%2.56M shares
HEALTHCARE OF ONTARIO PENSION PLAN TRUST FUND	3.30%2.54M shares
VANGUARD CAPITAL MANAGEMENT LLC	3.25%2.5M shares
FIRST TRUST ADVISORS LP	2.45%1.88M shares
GEODE CAPITAL MANAGEMENT, LLC	2.02%1.56M shares
Forest Avenue Capital Management LP	2.01%1.55M shares
TWO SIGMA INVESTMENTS, LP	1.92%1.48M shares
WESTFIELD CAPITAL MANAGEMENT CO LP	1.75%1.34M shares
Invesco Ltd.	1.69%1.3M shares
STATE STREET CORP	1.69%1.3M shares
RENAISSANCE TECHNOLOGIES LLC	1.54%1.18M shares
MASSACHUSETTS FINANCIAL SERVICES CO /MA/	1.36%1.05M shares
ALLIANCEBERNSTEIN L.P.	1.36%1.04M shares
FMR LLC	1.27%974.79K shares
GOLDMAN SACHS GROUP INC	1.19%914.81K shares
BNP PARIBAS ASSET MANAGEMENT Holding S.A.	1.12%864.1K shares

Percentages use 76.88M shares of this listed class outstanding on Jun 30, 2026.

Gray completes the 100% scale. Reported positions may overlap; holders have different reporting dates.

Source: SEC Form 13F ↗Updated Sep 29, 2026 · Quarterly data

Insider buys & sells

Jul 1, 2024–Jun 30, 2026

Buys1$250.0K disclosed value

Sells (SEC code S)12$2.53B disclosed value

Transaction	Insider	Type	Shares	Price	Value	Owned after
Apr 9, 2026Form 4	Blackstone Holdings I/II GP L.L.C. +6TenPercentOwner	SellClass A Common Stock · indirect	5.87M	$54.00	$316.73M	19.30M
Apr 9, 2026Form 4	Blackstone Holdings I/II GP L.L.C. +6TenPercentOwner	SellClass A Common Stock · indirect	9.53M	$54.00	$514.55M	178.6K
Apr 9, 2026Form 4	BCP 8/BEP 3 Holdings Manager L.L.C. +8TenPercentOwner	SellClass A Common Stock · indirect	5.87M	$54.00	$316.73M	19.30M
Apr 9, 2026Form 4	BCP 8/BEP 3 Holdings Manager L.L.C. +8TenPercentOwner	SellClass A Common Stock · indirect	9.53M	$54.00	$514.55M	178.6K
Jan 8, 2026Form 4	Blackstone Holdings II L.P. +6TenPercentOwner	SellClass A Common Stock · indirect	480.2K	$45.00	$21.61M	25.16M

Review ownership filings at SEC.gov ↗

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Legence Corp. (LGN)

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