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1. Company Snapshot

1.a. Company Description

ACS, Actividades de Construcción y Servicios, S.A. provides construction and related services in Spain and internationally.The company undertakes construction activities related to development of highways, railways, maritime, airport works, hydraulic infrastructures, coasts, ports, civil engineering, educational and sports facilities, residential, and social infrastructures and facilities; undertakes contracts for the provision of mining services and infrastructure required for mining activities; and offers maintenance services for buildings, public places, and organizations.It also engages in the operation and maintenance activities, and development of real estate infrastructures; design, development, construction, and operation of infrastructure projects, real estates, and facilities; and promotion and development of transport and public facilities, as well as management of different public-private collaboration models.


In addition, the company offers services for people, such as care for elderly citizens, dependent people, disabled people, and children aged up until the age of three; and manages playschools and collective restoration.Further, it provides services for building, such as maintenance, energy efficiency, cleaning, security, and logistics and auxiliary services; and services for public spaces comprising managing public lighting, which includes investing in changing light fittings, environmental services, and airport services.ACS, Actividades de Construcción y Servicios, S.A. was founded in 1997 and is based in Madrid, Spain.

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1.b. Last Insights on ACS

ACS, Actividades de Construcción y Servicios, S.A. has been positively driven by its potential undervaluation, with estimates suggesting it could be up to 43.5% below its intrinsic value. The pan-European STOXX Europe 600 Index recently rose 1.77%, buoyed by relief over the U.S. federal government's reopening. ACS's undervaluation could make it an attractive opportunity for investors navigating fluctuating economic indicators and sentiment. No recent earnings release or share buyback information is available. According to a recent report, identifying undervalued stocks like ACS can be crucial for investors seeking opportunities in the current market.

1.c. Company Highlights

2. ACS Group Reports Strong Performance in H1 2025

ACS Group reported strong performance in the first half of 2025, with sales up 28.6% to EUR 24.1 billion and ordinary net profit up 17% to EUR 392 million. EBITDA increased 23.9% to EUR 1.4 billion, driven by robust momentum across segments. The group's net operating cash flow adjusted for factoring variations reached EUR 1.8 billion in the last 12 months, up EUR 265 million year-on-year. The EPS came out at EUR 0.87, beating estimates of EUR 0.67. According to the company's management, "the strong performance was driven by the group's diversified portfolio, with significant contributions from data centers, biopharma, and defense segments".

Publication Date: Aug -01

📋 Highlights
  • Strong Sales Growth: Sales increased by 28.6% to EUR 24.1 billion in the first half of 2025.
  • EBITDA Growth: EBITDA rose by 23.9% to EUR 1.4 billion, driven by strong segment performance.
  • Net Operating Cash Flow: Adjusted net operating cash flow reached EUR 1.8 billion, up EUR 265 million year-on-year.
  • Strategic Investments: Invested EUR 436 million in Dornan acquisition and EUR 476 million in other M&A activities.
  • Order Backlog Growth: Order backlog grew 12% to EUR 89.3 billion, representing approximately 2 years of work.

Segmental Performance

Turner's sales grew 41.2% to EUR 12.2 billion, driven by digital infrastructure and biopharma projects. CIMIC's sales increased 26.3%, supported by advanced technology, healthcare, and defense. The Engineering & Construction segment saw solid growth, with sales up 11.5% to EUR 5.2 billion. Infrastructure's contribution to net profit was impacted by changes in tax regulation and FX movements.

Growth Outlook and Trends

The company reiterated its ordinary net profit growth target of up to 17% for 2025. Key sectors driving growth include data centers, biopharma, and defense. The company sees significant growth potential in the US, particularly in AI investments, and believes it is well-positioned to capture this growth. The company also reported a 19% increase in EBITDA in Dragados' quarterly performance and a 6% increase in net operating cash flow.

Valuation and Financials

The stock is trading at a P/E Ratio of 15.07, a P/B Ratio of 3.25, and a P/S Ratio of 0.29. The EV/EBITDA ratio stands at 11.37, with a Dividend Yield of 3.29%. The Free Cash Flow Yield is 8.9%, and the ROIC is -32.09%, while the ROE is 21.54%. The Net Debt / EBITDA ratio is 1.84. With a strong growth outlook and improving profitability, the stock seems to offer an attractive investment opportunity.

Management's Commentary

The company's management remains optimistic about the growth prospects, citing a strong pipeline of projects, including a large data center for Meta in Louisiana and a state-of-the-art data center in Pennsylvania for CoreWeave. The company expects to recognize a significant amount of backlog in the future, but not yet reflected in the presentation.

3. NewsRoom

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3 European Stocks Estimated To Be Up To 43.5% Below Intrinsic Value

Nov -21

Source:

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Top European Dividend Stocks To Watch In March 2025

Mar -04

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Public companies among HOCHTIEF Aktiengesellschaft's (ETR:HOT) largest stockholders and were hit after last week's 4.2% price drop

Apr -08

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.51%)

6. Segments

Construction

Expected Growth: 4.5%

ACS's 4.5% growth in Construction is driven by increasing infrastructure investments, urbanization, and government-backed projects. Strong demand for residential and commercial buildings, coupled with a focus on sustainable construction, also contributes to the growth. Additionally, the company's diversified portfolio and strategic acquisitions have enhanced its competitiveness and expanded its market share.

Services

Expected Growth: 4.8%

ACS's 4.8% growth is driven by increasing demand for infrastructure development, urbanization, and renewable energy projects. Strong backlog of construction contracts, strategic acquisitions, and expansion into high-growth markets also contribute to growth. Additionally, the company's diversified service portfolio, including engineering, procurement, and construction (EPC) services, supports its growth momentum.

Corporation, Others and Adjustments

Expected Growth: 3.5%

ACS, Actividades de Construcción y Servicios, S.A. achieved 3.5% growth driven by Corporation's increased infrastructure investments, Others' expansion into renewable energy, and Adjustments' effective cost management. Strong demand for construction services, strategic acquisitions, and favorable government policies also contributed to the growth.

Concessions

Expected Growth: 5.2%

ACS's concessions segment growth of 5.2% is driven by increasing infrastructure investments in Europe and Latin America, coupled with a strong backlog of projects. Additionally, the company's diversification into renewable energy and transportation concessions has contributed to the growth. Furthermore, ACS's strategic partnerships and joint ventures have enabled the company to capitalize on emerging market opportunities.

7. Detailed Products

Construction

ACS provides construction services for infrastructure, industrial, and building projects, including highways, railways, airports, and energy facilities.

Industrial Services

ACS offers industrial services, including maintenance, repair, and operation of industrial facilities, such as power plants, oil and gas facilities, and chemical plants.

Environmental Services

ACS provides environmental services, including waste management, water treatment, and environmental consulting, to help companies manage their environmental impact.

Concessions

ACS develops and operates infrastructure concessions, including toll roads, bridges, and airports, to provide efficient and sustainable transportation solutions.

Renewable Energy

ACS develops and operates renewable energy projects, including wind farms, solar parks, and hydroelectric power plants, to provide clean and sustainable energy solutions.

8. ACS, Actividades de Construcción y Servicios, S.A.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes is moderate due to the presence of alternative construction and service providers in the market.

Bargaining Power Of Customers

The bargaining power of customers is low due to the specialized nature of ACS's services and the lack of alternative providers.

Bargaining Power Of Suppliers

The bargaining power of suppliers is moderate due to the presence of multiple suppliers in the market, but ACS's large scale of operations gives it some negotiating power.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the construction and services industry, including the need for specialized skills and equipment.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of several established players in the market, leading to a competitive bidding process for contracts.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 64.81%
Debt Cost 8.83%
Equity Weight 35.19%
Equity Cost 9.36%
WACC 9.01%
Leverage 184.21%

11. Quality Control: ACS, Actividades de Construcción y Servicios, S.A. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
ACS

A-Score: 6.9/10

Value: 5.8

Growth: 6.6

Quality: 4.4

Yield: 7.5

Momentum: 9.0

Volatility: 8.3

1-Year Total Return ->

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Stock-Card
Balfour Beatty

A-Score: 6.5/10

Value: 5.8

Growth: 6.1

Quality: 4.5

Yield: 4.4

Momentum: 9.0

Volatility: 9.3

1-Year Total Return ->

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Stock-Card
HOCHTIEF

A-Score: 6.1/10

Value: 5.3

Growth: 6.6

Quality: 4.8

Yield: 5.6

Momentum: 10.0

Volatility: 4.3

1-Year Total Return ->

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Stock-Card
Webuild

A-Score: 5.9/10

Value: 7.0

Growth: 6.6

Quality: 2.9

Yield: 5.0

Momentum: 8.5

Volatility: 5.3

1-Year Total Return ->

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Stock-Card
Budimex

A-Score: 4.5/10

Value: 2.4

Growth: 4.8

Quality: 5.4

Yield: 8.8

Momentum: 2.0

Volatility: 3.3

1-Year Total Return ->

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Stock-Card
Arcadis

A-Score: 4.3/10

Value: 4.7

Growth: 6.3

Quality: 5.8

Yield: 3.1

Momentum: 1.0

Volatility: 4.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

81.2$

Current Price

81.2$

Potential

-0.00%

Expected Cash-Flows