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1. Company Snapshot

1.a. Company Description

AECOM, together with its subsidiaries, provides professional infrastructure consulting services for governments, businesses, and organizations in the Americas, Europe, the Middle East, Africa, and the Asia Pacific.It operates through three segments: Americas, International, and AECOM Capital.The company offers planning, consulting, architectural and engineering design, construction and program management, and investment and development services to commercial and government clients.


It also invests in and develops real estate projects.In addition, the company provides construction services, including building construction and energy, and infrastructure and industrial construction.It serves transportation, water, government, facilities, environmental, and energy sectors.


The company was formerly known as AECOM Technology Corporation and changed its name to AECOM in January 2015.AECOM was incorporated in 1980 and is headquartered Dallas, Texas.

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1.b. Last Insights on ACM

AECOM's recent performance was negatively impacted by mixed fourth-quarter fiscal 2025 results, with a revenue miss. The company's strategic review of its Construction Management unit may have also contributed to investor sell-off. Additionally, despite a strong infrastructure spending environment, AECOM's earnings report failed to meet expectations. According to analysts, the company's margin contraction is likely a temporary headwind. Institutional investors, such as Acadian Asset Management LLC and Hantz Financial Services Inc., have recently acquired positions in the company. (Source: Bloomberg)

1.c. Company Highlights

2. AECOM's Q3 Earnings: A Record-Breaking Performance

AECOM's third-quarter earnings report surpassed expectations, with a 6% organic NSR growth, led by an 8% growth in the Americas. The company delivered a 17.1% segment adjusted operating margin, a new record for the organization. This performance reflects AECOM's returns-based capital allocation policy, investments in organic growth initiatives, technical capabilities, and trusted client relationships. Adjusted EBITDA and EPS increased by 10% and 16%, respectively, with a 27% increase in free cash flow year-to-date.

Publication Date: Aug -14

📋 Highlights
  • Organic NSR Growth:: 6% overall, driven by 8% growth in the Americas.
  • Record Operating Margin:: 17.1% segment adjusted operating margin, a new company record.
  • EBITDA & EPS Growth:: Adjusted EBITDA up 10%, EPS increased 16% year-over-year.
  • Free Cash Flow Surge:: 27% year-to-date free cash flow growth, exceeding expectations.
  • Guidance Upgrade:: Fiscal 2025 EBITDA and EPS guidance raised by 10% and 16%, respectively.

Margin Expansion Drivers

The company's margin expansion is driven by operational leverage, investments in organic growth initiatives, and technical capabilities. As Gaurav Kapoor mentioned, "Our margin expansion is driven by operational leverage, investments in organic growth initiatives, and technical capabilities. We expect continued margin improvement driven by these factors, as well as our focus on high-returning investments and capital allocation decisions."

Strong Backlog and Pipeline

AECOM has an unprecedented level of visibility for continued growth, with a new all-time high backlog and pipeline. The company is well-positioned to benefit from government initiatives and investments in infrastructure, sustainability, and resilience, with a leading position in key markets such as transportation, water, and energy.

Valuation

With a P/E Ratio of 25.97 and an EV/EBITDA of 14.41, the market seems to be pricing in AECOM's strong growth prospects. The company's ROIC of 13.25% and ROE of 26.79% indicate a strong ability to generate profits from its investments. However, the Net Debt / EBITDA ratio of 1.15 suggests that the company's debt levels may be a concern.

Outlook

AECOM is confident in its ability to continue to deliver a book-to-bill ratio of over 1, driven by its strong pipeline and high win rates. The company's Water and Environment advisory business is also progressing well, with double-digit growth and a strong pipeline of opportunities. With analysts estimating next year's revenue growth at 5.7%, AECOM's strong performance is likely to continue.

3. NewsRoom

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AMTM or ACM: Which Is the Better Value Stock Right Now?

Dec -04

Source: zacks.com

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ACM Research: Riding China's AI-Driven Capex Wave

Dec -01

Source: seekingalpha.com

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Burlington Stores, Oracle, Nutanix Are Among Top 10 Large Cap Losers Last Week (Nov. 24-Nov. 28): Are the Others in Your Portfolio?

Nov -30

Source: feeds.benzinga.com

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Charles Schwab Investment Management Inc. Purchases 10,160 Shares of AECOM $ACM

Nov -29

Source: defenseworld.net

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Boston Partners Raises Stake in AECOM $ACM

Nov -29

Source: defenseworld.net

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Aecom: When AI Actually Moves The Margin Needle But The Market Looks The Other Away

Nov -26

Source: seekingalpha.com

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ACM Research: Temporary Q3 Margin Woes Mask The Massive Tailwind Of China's Foreign AI Chip Ban

Nov -25

Source: seekingalpha.com

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AECOM (ACM) Analyst/Investor Day Transcript

Nov -21

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.50%)

6. Segments

Planning, Consulting, Architectural and Engineering Design, and Construction and Program Management Services

Expected Growth: 4.5%

AECOM's 4.5% growth in Planning, Consulting, Architectural and Engineering Design, and Construction and Program Management Services is driven by increasing infrastructure investments, urbanization, and government initiatives. Rising demand for sustainable and resilient infrastructure, coupled with AECOM's expertise in digital solutions and project management, further fuels growth.

AECOM Capital

Expected Growth: 5.5%

AECOM Capital's 5.5% growth is driven by increasing demand for infrastructure development, urbanization, and government investments in transportation and energy projects. Additionally, the company's strategic partnerships, diversified portfolio, and expertise in public-private partnerships (P3s) contribute to its growth momentum.

7. Detailed Products

Design & Consulting Services

AECOM provides design and consulting services for various industries, including transportation, buildings, water, and environment.

Construction Management

AECOM offers construction management services to oversee and manage construction projects from start to finish.

Operations and Maintenance

AECOM provides operations and maintenance services to ensure facilities and infrastructure are running efficiently and effectively.

Environmental Services

AECOM offers environmental services, including assessment, remediation, and sustainability consulting.

Program Management

AECOM provides program management services to oversee and coordinate large-scale projects and programs.

Cost Management

AECOM offers cost management services to help clients manage project costs and budgets.

Project Management

AECOM provides project management services to plan, coordinate, and deliver projects on time and within budget.

8. AECOM's Porter Forces

Forces Ranking

Threat Of Substitutes

AECOM's services are specialized, but there are some substitutes available in the market, which reduces the threat of substitutes.

Bargaining Power Of Customers

AECOM's customers are mostly governments and large corporations, which have limited bargaining power due to the complexity of the projects.

Bargaining Power Of Suppliers

AECOM relies on a network of suppliers for materials and equipment, but it has some bargaining power due to its large scale of operations.

Threat Of New Entrants

The construction and engineering industry has high barriers to entry, including regulatory hurdles and high capital requirements, which reduces the threat of new entrants.

Intensity Of Rivalry

The construction and engineering industry is highly competitive, with many established players competing for a limited number of projects.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 51.04%
Debt Cost 7.85%
Equity Weight 48.96%
Equity Cost 9.86%
WACC 8.84%
Leverage 104.27%

11. Quality Control: AECOM passed 2 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
AECOM

A-Score: 5.5/10

Value: 3.5

Growth: 5.7

Quality: 5.2

Yield: 1.0

Momentum: 8.0

Volatility: 9.7

1-Year Total Return ->

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API Group

A-Score: 5.4/10

Value: 2.5

Growth: 6.4

Quality: 6.4

Yield: 0.0

Momentum: 8.5

Volatility: 8.3

1-Year Total Return ->

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TopBuild

A-Score: 4.8/10

Value: 3.5

Growth: 9.0

Quality: 6.4

Yield: 0.0

Momentum: 5.0

Volatility: 5.0

1-Year Total Return ->

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MYR Group

A-Score: 4.7/10

Value: 3.2

Growth: 4.9

Quality: 5.8

Yield: 0.0

Momentum: 9.5

Volatility: 4.7

1-Year Total Return ->

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Stock-Card
Construction Partners

A-Score: 4.5/10

Value: 1.5

Growth: 8.6

Quality: 3.4

Yield: 0.0

Momentum: 9.0

Volatility: 4.7

1-Year Total Return ->

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Stock-Card
Fluor

A-Score: 4.2/10

Value: 6.0

Growth: 6.0

Quality: 6.7

Yield: 0.0

Momentum: 3.0

Volatility: 3.3

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

102.43$

Current Price

102.43$

Potential

-0.00%

Expected Cash-Flows