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Aecon Group Inc. (TSE:ARE)
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Aecon Group Inc. (ARE) AI Stock Analysis

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TSE:ARE

Aecon Group Inc.

(TSX:ARE)

Rating:68Neutral
Price Target:
C$22.00
â–²(6.80% Upside)
Aecon Group Inc. receives a score of 67.8, driven by strong earnings call highlights and positive technical indicators. The company's record backlog and strategic shift towards non-fixed price contracts are significant strengths. However, financial performance concerns, particularly in cash flow and valuation, temper the overall score. Investors should monitor operational efficiency improvements and cash flow management.
Positive Factors
Asset management
Asset sales lowered financial leverage while the joint venture with Oaktree has the potential to be a growth platform focused on the utilities sector.
Backlog growth
The backlog increased significantly and reached $9.6B, a new record for the company.
Dividends and buyback
The company increased its dividend and initiated a buyback following in-line Q4/24 results.
Negative Factors
Earnings pressure
Earnings continue to be pressured by legacy fixed price projects and sluggish margins in other divisions of the Construction segment.
Legacy projects
Legacy project risk remains, impacting the company's future stability.
Tariff impact
The potential impact of tariffs on material costs and/or availability add another risk to the near-term earnings outlook.

Aecon Group Inc. (ARE) vs. iShares MSCI Canada ETF (EWC)

Aecon Group Inc. Business Overview & Revenue Model

Company DescriptionAecon Group Inc. (ARE) is a leading Canadian construction and infrastructure development company, engaged in providing a wide range of services including construction, project management, and development in the infrastructure, energy, and mining sectors. The company operates through several segments, offering services such as civil construction, urban transportation systems, industrial facilities, and utility works. Aecon is recognized for its expertise in delivering large-scale, complex infrastructure projects across Canada and internationally.
How the Company Makes MoneyAecon Group Inc. generates revenue primarily through its various construction and infrastructure projects. The company secures contracts for large-scale projects in sectors such as transportation, utilities, and industrial installations, where it is responsible for the design, construction, and sometimes the financing of these projects. Aecon's revenue streams include project-based payments, long-term service agreements, and concessions where they operate infrastructure assets. Significant partnerships with government entities and private sector clients also contribute to its earnings, as these relationships often lead to sustained project pipelines and recurring revenue opportunities.

Aecon Group Inc. Earnings Call Summary

Earnings Call Date:Jul 31, 2025
(Q2-2025)
|
% Change Since: 9.87%|
Next Earnings Date:Oct 22, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong performance with record revenue and backlog, driven by significant growth in construction and strategic shift to non-fixed price contracts. However, challenges with legacy projects and a decline in Concessions segment EBITDA are notable concerns. Overall, the highlights significantly outweigh the lowlights.
Q2-2025 Updates
Positive Updates
Record Revenue and Backlog
Aecon reported revenue for Q2 2025 of $1.3 billion, a 52% increase from the same period in 2024. The backlog reached a record high of $10.7 billion.
Strong Performance in Construction Segment
Construction revenue was $1.3 billion, a 52% increase year-over-year, with significant growth across industrial, nuclear, and civil operations.
Shift to Non-Fixed Price Backlog
76% of Aecon's backlog is now non-fixed price, compared to 50% the previous year, improving margin predictability.
Successful Start of Oneida Energy Storage Project
The Oneida Energy Storage Project commenced operations, becoming the largest grid-scale battery energy storage facility in Canada.
Negative Updates
Legacy Project Challenges
Legacy projects continue to impact results, with substantial completion pushed to the end of 2025. Remaining backlog on these projects is $76 million.
Lower Concessions EBITDA
Concessions segment EBITDA decreased to $16 million from $30 million in the previous year, primarily due to last year's one-time gains.
Company Guidance
During the Aecon Group Inc. earnings call for the second quarter of 2025, the company provided guidance that emphasized its significant growth and strong financial performance. Aecon reported a record backlog of $10.7 billion, marking the highest in its history, and reflected a robust 52% increase in revenue to $1.3 billion for the quarter. Adjusted EBITDA for the quarter rose to $41 million from a negative $154 million the previous year, and the operating profit improved to $2 million compared to a $166 million loss previously. New contract awards reached $2.4 billion, driven largely by the Darlington New Nuclear Project. The company emphasized its strategic shift towards more collaborative and variable target price contracts, which now comprise 76% of the backlog, improving margin predictability. Additionally, Aecon's financial position was bolstered by a renewed $600 million revolving credit facility and a separate $400 million facility for Aecon Utilities, with no significant debt maturities until 2029. Looking forward, Aecon expects continued revenue growth, supported by its record backlog, strong bid pipeline, and ongoing opportunities in the energy, power, and U.S. markets.

Aecon Group Inc. Financial Statement Overview

Summary
Aecon Group Inc. is facing significant financial challenges, with declining revenues, negative profitability, and cash flow constraints. The balance sheet remains moderately leveraged, but operational inefficiencies and cash flow issues pose risks. The company needs to focus on improving operational efficiency and cash flow generation to stabilize its financial position.
Income Statement
45
Neutral
Aecon Group Inc. shows declining revenue and profitability margins. The TTM data indicates a negative EBIT and net income, suggesting operational challenges. Gross profit margin is also decreasing, reflecting reduced efficiency in cost management. Revenue has declined significantly from 2023, and the company has not demonstrated consistent revenue growth over the past few years.
Balance Sheet
55
Neutral
The company's balance sheet reveals a moderate debt-to-equity ratio, indicating a balanced approach to leverage, although total debt has increased. However, the equity ratio reflects a modest portion of financing from equity. Return on equity is negative due to net losses, which highlights operational inefficiencies. The company maintains a reasonable level of cash and cash equivalents, providing some liquidity cushion.
Cash Flow
50
Neutral
Aecon Group Inc. exhibits a volatile cash flow position with negative free cash flow in recent periods, indicating challenges in generating cash from operations after capital expenditures. The operating cash flow to net income ratio is low due to negative net income, reflecting poor cash generation relative to earnings. The free cash flow to net income ratio is also negative, underscoring cash flow management issues.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue4.91B4.24B4.64B4.70B3.98B3.64B
Gross Profit376.37M182.55M255.63M355.96M366.82M401.25M
EBITDA175.14M36.14M311.36M176.51M192.90M228.44M
Net Income24.93M-59.52M161.89M30.38M49.68M88.03M
Balance Sheet
Total Assets3.45B3.23B3.20B3.57B3.29B3.29B
Cash, Cash Equivalents and Short-Term Investments462.33M438.02M645.78M378.01M532.68M658.27M
Total Debt517.34M304.42M418.19M909.06M779.63M728.03M
Total Liabilities2.55B2.26B2.13B2.61B2.37B2.41B
Stockholders Equity887.83M956.12M1.06B954.00M913.57M874.11M
Cash Flow
Free Cash Flow-89.83M-45.67M27.07M-154.17M-73.03M133.68M
Operating Cash Flow-30.94M7.60M51.07M-112.86M-31.41M272.96M
Investing Cash Flow-195.94M-159.61M360.78M-35.90M-39.63M-189.36M
Financing Cash Flow180.22M-58.26M-141.91M-11.86M-52.28M-107.26M

Aecon Group Inc. Technical Analysis

Technical Analysis Sentiment
Positive
Last Price20.60
Price Trends
50DMA
19.96
Positive
100DMA
18.81
Positive
200DMA
21.39
Negative
Market Momentum
MACD
0.18
Negative
RSI
60.28
Neutral
STOCH
42.89
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:ARE, the sentiment is Positive. The current price of 20.6 is above the 20-day moving average (MA) of 19.86, above the 50-day MA of 19.96, and below the 200-day MA of 21.39, indicating a neutral trend. The MACD of 0.18 indicates Negative momentum. The RSI at 60.28 is Neutral, neither overbought nor oversold. The STOCH value of 42.89 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:ARE.

Aecon Group Inc. Peers Comparison

Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
78
Outperform
$17.16B39.3014.26%0.57%12.49%26.18%
78
Outperform
C$36.88B45.8710.52%0.53%18.24%28.47%
74
Outperform
C$1.20B11.959.99%6.04%5.52%-18.01%
70
Outperform
$15.95B6.5657.95%0.09%13.07%697.05%
68
Neutral
C$1.28B50.572.78%3.69%20.53%74.96%
66
Neutral
C$1.30B13.2025.25%3.24%8.49%14.10%
58
Neutral
HK$14.01B4.01-3.70%5.60%2.26%-61.32%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:ARE
Aecon Group Inc.
20.60
2.90
16.38%
TSE:ATRL
AtkinsRealis
92.67
39.01
72.71%
TSE:STN
Stantec
153.25
39.57
34.81%
TSE:BDT
Bird Construction
23.76
0.52
2.24%
TSE:MTL
Mullen Group
13.90
0.13
0.94%
TSE:WSP
WSP Global
285.87
60.64
26.92%

Aecon Group Inc. Corporate Events

M&A TransactionsBusiness Operations and Strategy
Aecon Group Inc. Expands U.S. Industrial Footprint with Bodell Construction Acquisition
Positive
Aug 7, 2025

Aecon Group Inc. has acquired Bodell Construction Company, a non-union industrial construction firm based in Salt Lake City, Utah. This acquisition strengthens Aecon’s industrial capabilities and positions it for expansion in key U.S. sectors, enhancing its relationships with major U.S. clients. The transaction is expected to diversify Aecon’s offerings across multidisciplinary sectors and support growth in the Mountain States Region and new geographic markets.

The most recent analyst rating on (TSE:ARE) stock is a Buy with a C$25.00 price target. To see the full list of analyst forecasts on Aecon Group Inc. stock, see the TSE:ARE Stock Forecast page.

Business Operations and Strategy
Aecon Secures $1.4 Billion Subway Extension Contract in Ontario
Positive
Aug 6, 2025

Aecon Group Inc., as part of the North End Connectors consortium, has secured a $1.4 billion contract for the Yonge North Subway Extension Advance Tunnel project in Ontario. This project, which adds $477 million to Aecon’s backlog, involves designing and constructing a 6.3-kilometre tunnel segment to extend the TTC’s Line 1 subway service, enhancing transit access and supporting economic growth in the Greater Toronto Area.

The most recent analyst rating on (TSE:ARE) stock is a Buy with a C$25.00 price target. To see the full list of analyst forecasts on Aecon Group Inc. stock, see the TSE:ARE Stock Forecast page.

Business Operations and StrategyFinancial Disclosures
Aecon Group Achieves Record Backlog and Revenue Growth in Q2 2025
Positive
Jul 31, 2025

Aecon Group Inc. reported a record backlog of $10.7 billion for the second quarter of 2025, driven by strategic acquisitions and a robust bid pipeline. The company experienced a significant increase in revenue and operating profit compared to the previous year, attributed to reduced losses on fixed price legacy projects. Aecon is actively involved in major nuclear projects, including North America’s first commercial Small Modular Reactor, and has commenced operations on Canada’s largest grid-scale battery energy storage facility. These developments highlight Aecon’s strong market positioning and commitment to sustainable practices.

The most recent analyst rating on (TSE:ARE) stock is a Hold with a C$28.00 price target. To see the full list of analyst forecasts on Aecon Group Inc. stock, see the TSE:ARE Stock Forecast page.

Financial Disclosures
Aecon Group Inc. Schedules Q2 2025 Financial Results Release
Neutral
Jun 19, 2025

Aecon Group Inc. has announced the release of its second quarter 2025 financial results, scheduled for July 31, 2025, after market close. A live webcast and conference call will follow on August 1, 2025, at 9 a.m. Eastern Time. This announcement is significant for stakeholders as it provides insights into the company’s financial health and performance, potentially impacting its market positioning and investor relations.

The most recent analyst rating on (TSE:ARE) stock is a Buy with a C$22.00 price target. To see the full list of analyst forecasts on Aecon Group Inc. stock, see the TSE:ARE Stock Forecast page.

Executive/Board ChangesShareholder MeetingsDividends
Aecon Group Inc. Announces AGM Results and Dividend Declaration
Positive
Jun 3, 2025

Aecon Group Inc. announced the results of its Annual General Meeting, where all nominated directors were elected, and key resolutions, including executive compensation and auditor re-appointment, were approved by shareholders. Monica Sloan retired from the board after 12 years of service. The board also declared a quarterly dividend of 19 cents per share, payable on July 3, 2025. These developments reflect Aecon’s ongoing commitment to governance and shareholder value, potentially impacting its market position and stakeholder relations positively.

The most recent analyst rating on (TSE:ARE) stock is a Buy with a C$22.00 price target. To see the full list of analyst forecasts on Aecon Group Inc. stock, see the TSE:ARE Stock Forecast page.

Business Operations and Strategy
Aecon Secures Major Contract for Darlington New Nuclear Project
Positive
May 8, 2025

Aecon Group Inc., in partnership with Kiewit Nuclear Canada, has been awarded a significant contract by Ontario Power Generation for the execution phase of the Darlington New Nuclear Project in Ontario. This project, valued at approximately $1.3 billion for Aecon, involves the construction of North America’s first grid-scale Small Modular Reactor. The project is expected to be completed by 2030 and is seen as a pioneering step in nuclear energy, enhancing Aecon’s position in the nuclear construction industry and contributing to Ontario’s future energy demands.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Aug 19, 2025