Aecom Technology (ACM) AI Stock Analysis

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Aecom Technology

(NYSE:ACM)

80Outperform

Aecom Technology's overall stock score reflects a strong financial performance and positive earnings call, which highlight robust growth, strategic expansions, and strong operational metrics. However, technical analysis indicates bearish trends, and the current valuation suggests the stock may be overvalued, warranting cautious optimism. The company's prospects remain favorable due to strategic initiatives and industry positioning.

Positive Factors

Financial Performance

EBITDA of $271mn increased 8% YoY on NSR growth of 5.5% YoY.

Growth Potential

Accelerating win rates on complex projects and an expanding addressable market driven by growth in program management and advisory are expected to drive AECOM's growth.

Market Position

AECOM has industry-leading market share across its top end markets in a highly fragmented industry.

Negative Factors

Government Policy Impact

ACM has limited exposure to government agencies affected by funding pauses, indicating minimal impact from recent policy changes.

Aecom Technology (ACM) vs. S&P 500 (SPY)

Market Cap

$11.84B

Dividend Yield1.03%

Average Volume (3M)1.15M

Price to Earnings (P/E)25.4

Beta (1Y)0.72

Revenue Growth8.89%

EPS Growth669.67%

CountryUS

Employees51,000

SectorIndustrials

Sector Strength63

IndustryEngineering & Construction

Share Statistics

EPS (TTM)3.52

Shares Outstanding132,689,650

10 Day Avg. Volume1,097,291

30 Day Avg. Volume1,153,210

Financial Highlights & Ratios

PEG Ratio0.04

Price to Book (P/B)N/A

Price to Sales (P/S)0.77

Price to Cash Flow (P/CF)20.70

P/FCF Ratio28.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$118.67

Price Target Upside32.96% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering7

Aecom Technology Business Overview & Revenue Model

Company DescriptionAECOM, 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.

How the Company Makes MoneyAECOM makes money primarily through providing professional services in areas such as planning, consulting, and engineering design. The company's revenue streams are largely derived from contracts with public and private sector clients, including governments, corporations, and non-profit organizations. AECOM engages in both long-term, large-scale projects and smaller, short-term assignments. Key revenue factors include the company's ability to secure contracts, often through competitive bidding processes, and its capacity to deliver complex, multidisciplinary projects that require integrated solutions. Additionally, partnerships and joint ventures with other firms can enhance AECOM's offerings and expand its market reach, contributing to its earnings.

Aecom Technology Financial Statement Overview

Summary

Aecom Technology exhibits strong financial performance with robust revenue growth, effective cost management, and solid cash flow generation. Despite moderate leverage, the company maintains a strong return on equity and solid cash flow metrics. Profitability margins could be improved, but the financial health supports future growth and stability.

Income Statement

Very Positive

Aecom Technology demonstrates strong financial performance with consistent revenue and profit growth. The TTM (Trailing-Twelve-Months) gross profit margin is approximately 6.8%, and the net profit margin is around 2.9%. Notably, the revenue has grown by about 12.8% from the previous year, indicating robust business expansion. EBIT and EBITDA margins also show healthy operating efficiency. However, the net profit margin is relatively modest, suggesting room for improved cost management and profitability.

Balance Sheet

Positive

The balance sheet reveals a stable financial position with a debt-to-equity ratio of approximately 1.37, indicating moderate leverage. The equity ratio is around 18.6%, reflecting a balanced capital structure. Return on Equity (ROE) is approximately 21.5%, showcasing strong profitability relative to shareholder investment. However, the company’s leverage should be monitored to ensure it does not impede financial flexibility.

Cash Flow

Very Positive

Aecom Technology's cash flow performance is solid, with a notable operating cash flow to net income ratio of 1.76, indicating effective cash generation relative to net income. The free cash flow growth rate is impressive at 30.8% year-over-year, suggesting strong cash flow management. The free cash flow to net income ratio is 1.63, reflecting efficient capital expenditure and cash flow utilization. Overall, the company maintains healthy cash flow metrics, supporting ongoing operations and potential investments.

TTM	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Breakdown
Income Statement		Total Revenue
16.22B	16.11B	14.38B	13.15B	13.34B	13.24B
	Gross Profit
1.11B	1.08B	945.47M	847.97M	798.42M	709.56M
	EBIT
917.82M	827.44M	324.13M	646.80M	629.55M	381.46M
	EBITDA
1.17B	1.08B	543.64M	826.86M	813.36M	580.02M
	Net Income Common Stockholders
474.87M	402.27M	55.33M	414.63M	319.79M	186.85M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
206.55M	1.32B	1.26B	1.17B	1.23B	1.71B
	Total Assets
3.94B	12.06B	11.23B	11.27B	11.85B	13.12B
	Total Debt
200.72M	3.03B	2.75B	2.80B	2.89B	2.81B
	Net Debt
-5.83M	1.45B	1.49B	1.63B	1.66B	1.10B
	Total Liabilities
1.99B	9.69B	8.85B	8.66B	9.02B	9.71B
	Stockholders Equity
1.91B	2.18B	2.21B	2.48B	2.71B	3.29B
Cash Flow		Free Cash Flow
772.16M	827.49M	590.38M	576.62M	568.41M	215.03M
	Operating Cash Flow
835.52M	827.49M	695.98M	713.64M	704.67M	329.62M
	Investing Cash Flow
-148.59M	-210.64M	-138.18M	-175.03M	-421.09M	2.04B
	Financing Cash Flow
-290.51M	-295.46M	-472.94M	-588.32M	-872.53M	-1.63B

Aecom Technology Technical Analysis

Technical Analysis Sentiment

Negative

Last Price89.25

Price Trends

50DMA

98.59

Negative

100DMA

104.29

Negative

200DMA

100.33

Negative

Market Momentum

MACD

-1.64

Negative

RSI

42.88

Neutral

STOCH

35.68

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ACM, the sentiment is Negative. The current price of 89.25 is below the 20-day moving average (MA) of 94.10, below the 50-day MA of 98.59, and below the 200-day MA of 100.33, indicating a bearish trend. The MACD of -1.64 indicates Negative momentum. The RSI at 42.88 is Neutral, neither overbought nor oversold. The STOCH value of 35.68 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ACM.

Aecom Technology Risk Analysis

Aecom Technology disclosed 43 risk factors in its most recent earnings report. Aecom Technology reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Aecom Technology Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ACM	80 Outperform	$11.84B	25.39	26.35%	1.03%	8.89%	669.67%
EME	77 Outperform	$15.55B	15.90	37.25%	0.29%	15.76%	61.64%
MTZ	72 Outperform	$8.41B	51.62	5.80%	―	2.56%	―
PWR	72 Outperform	$35.49B	39.71	13.32%	0.15%	13.36%	20.00%
FIX	71 Outperform	$10.54B	20.30	35.03%	0.46%	34.97%	62.08%
J	62 Neutral	$13.66B	22.96	10.92%	1.07%	-13.76%	-13.39%
Sector *	62 Neutral	$7.25B	12.39	3.08%	3.39%	3.63%	-14.32%

* Industrials Sector Average

Performance Comparison

ACM

Aecom Technology

89.25

-7.27

-7.53%

FIX

Comfort Systems

296.51

-24.39

-7.60%

EME

EMCOR Group

342.02

-18.22

-5.06%

Jacobs Solutions

111.45

-9.51

-7.86%

MTZ

MasTec

106.07

11.91

12.65%

PWR

Quanta Services

239.47

-22.44

-8.57%

Aecom Technology Earnings Call Summary

Earnings Call Date: Feb 3, 2025 | % Change Since: -13.82% | Next Earnings Date: May 12, 2025

Earnings Call Sentiment Positive

The earnings call reflects a strong performance by AECOM in Q1 2025, with significant growth in financial metrics, backlog, and strategic pursuits, particularly in the Americas. Despite minor challenges in international markets, the overall outlook remains positive, driven by high employee engagement and industry recognition.

Highlights

Record Employee Engagement and Industry Recognition

Employee engagement reached an all-time high, and AECOM was named the number one ranked company in its industry on Fortune’s World Most Admired Companies list for the 11th consecutive year.

Strong Financial Performance in Q1 2025

NSR increased by 5.5%, adjusted EBITDA rose by 8%, and adjusted EPS grew by 25%. Free cash flow increased by 28%.

Americas Segment Growth

NSR in the Americas increased by 9% in the Design business, and the segment-adjusted operating margin increased by 40 basis points.

Backlog and Pipeline at Record Highs

Total backlog achieved a new all-time high, with a 5% increase in the Design business backlog, including a 7% increase in the Americas.

High Win Rate in Strategic Pursuits

AECOM achieved a 100% win rate in its largest and most strategic pursuits in the first quarter.

Expanded Program Management Business

Program Management business grew three-fold in the past four years, now accounting for over 15% of total revenue.

Lowlights

Challenges in International Markets

Revenue in international markets varied, with certain areas like transportation in the UK remaining lower and a revenue decline in Australia.

Company Guidance

In the AECOM First Quarter 2025 Conference Call, the company provided an optimistic outlook and increased its financial guidance for fiscal 2025. Key metrics included a 5.5% increase in net service revenue (NSR), exceeding expectations, with the Americas segment showing a strong 9% growth in the Design business. Segment-adjusted operating margins rose by 40 basis points, surpassing the annual guidance of a 30 basis point increase. Adjusted EBITDA grew by 8%, while adjusted EPS saw a 25% increase, benefiting from a lower tax rate, though normalized EPS growth was 14%. Free cash flow improved by 28%, with $55 million returned to shareholders. The company's backlog reached a new all-time high with a 5% increase, including 7% in the Americas, and a book-to-burn ratio of 1.2, marking the 17th consecutive quarter above 1. AECOM emphasized its strategy of expanding its Program Management and Advisory Services, which now represent a significant portion of its revenue, and highlighted key growth drivers such as infrastructure investment and energy independence. The company remains confident in achieving a 17% margin by the end of fiscal 2026 and continues to allocate capital for growth and shareholder returns.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.