Aecon Group Inc. (ARE) AI Stock Analysis

• Market Cap: C$1.55B
• Dividend Yield: 3.03%
• Average Volume (3M): 351.55K
• Price to Earnings (P/E): 62.2
• Beta (1Y): 0.99
• Revenue Growth: 20.53%
• EPS Growth: 74.96%
• Country: CA
• Employees: 9,427
• Sector: Industrials
• Sector Strength: 72
• Industry: Engineering & Construction
• EPS (TTM): -0.09
• Shares Outstanding: 63,055,424
• 10 Day Avg. Volume: 403,034
• 30 Day Avg. Volume: 351,553
• PEG Ratio: 0.21
• Price to Book (P/B): 1.79
• Price to Sales (P/S): 0.40
• P/FCF Ratio: -37.48
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: C$23.11
• Price Target Upside: -7.78% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 9

• Rating: 66 Neutral
• Price Target: C$22.00 ▼(-12.21% Downside)

Aecon Group Inc.'s overall stock score reflects a mixed financial performance with strong revenue growth but thin margins and cash flow challenges. Technical indicators are moderately positive, supporting a bullish trend. The high P/E ratio suggests potential overvaluation, but the earnings call provided a positive outlook with record backlog and strategic shifts improving margin predictability.

Positive Factors

Record Backlog

A record backlog indicates strong future revenue potential and project pipeline, providing visibility and stability in earnings over the next few years.

Strategic Shift to Non-Fixed Price Contracts

Shifting to non-fixed price contracts enhances margin predictability and reduces risk, improving long-term financial performance and stability.

Renewed Credit Facilities

Renewed credit facilities enhance financial flexibility and liquidity, supporting ongoing operations and potential growth initiatives without immediate debt pressure.

Negative Factors

Thin Margins

Thin margins indicate challenges in operational efficiency, which can limit profitability and cash flow generation, impacting long-term financial health.

Negative Operating Cash Flow

Negative operating cash flow suggests potential liquidity issues, which could constrain the company's ability to invest in growth and meet financial obligations.

Legacy Project Challenges

Ongoing challenges with legacy projects can drain resources and management focus, potentially delaying new initiatives and impacting overall profitability.

Aecon Group Inc. Business Overview & Revenue Model

Company Description

Aecon Group Inc., together with its subsidiaries, provide construction and infrastructure development services to private and public sector clients in Canada, the United States, and internationally. It operates through two segments, Construction and Concessions. The Construction segment focuses primarily on the civil infrastructure, urban transportation systems, nuclear power infrastructure, utility infrastructure, and conventional industrial infrastructure market sectors. The Concessions segment engages in the development, building, construction, financing, and operation of construction projects by way of public-private partnership contract structures. The company was formerly known as Prefac Concrete Co. Ltd. and changed its name to Aecon Group Inc. in June 2001. Aecon Group Inc. was founded in 1877 and is headquartered in Toronto, Canada.

How the Company Makes Money

Aecon 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. Financial Statement Overview

Summary

Aecon Group Inc. shows a mixed financial performance. While there is a return to profitability and strong revenue growth, margins remain thin. The balance sheet shows improved leverage but low profitability on equity. Cash flow challenges persist, with negative operating cash flow indicating potential liquidity risks.

Income Statement

Aecon Group Inc. shows a mixed performance in its income statement. The TTM data indicates a gross profit margin of 7.67%, which is a slight improvement from previous years, but still relatively low for the industry. The net profit margin is positive at 0.51%, a recovery from the negative margin in 2024, indicating a return to profitability. Revenue growth is strong at 10.05% TTM, suggesting a positive trajectory in sales. However, the EBIT and EBITDA margins remain modest at 1.51% and 3.57% respectively, reflecting ongoing challenges in operational efficiency.

Balance Sheet

The balance sheet of Aecon Group Inc. reflects moderate financial stability. The debt-to-equity ratio has improved to 0.58 TTM, indicating a reduction in leverage compared to previous years. The return on equity is low at 2.68% TTM, suggesting limited profitability relative to shareholder equity. The equity ratio stands at approximately 25.76%, showing a reasonable proportion of equity financing. Overall, the company maintains a balanced approach to financing, but profitability remains a concern.

Cash Flow

Cash flow analysis reveals challenges for Aecon Group Inc. The operating cash flow is negative at -$30.94 million TTM, indicating potential liquidity issues. Free cash flow is also negative, although it has improved by 18.95% from the previous period. The free cash flow to net income ratio is high at 2.90, suggesting that free cash flow is significantly higher than net income, which may indicate cash flow management issues. Overall, cash flow stability is a concern that needs addressing.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	4.91B	4.24B	4.64B	4.70B	3.98B	3.64B
Gross Profit	249.37M	182.55M	255.63M	355.96M	328.12M	311.85M
EBITDA	-12.63M	-65.06M	48.40M	129.04M	122.05M	107.27M
Net Income	24.93M	-59.52M	161.89M	30.38M	49.68M	88.03M
Balance Sheet
Total Assets	3.45B	3.23B	3.20B	3.57B	3.29B	3.29B
Cash, Cash Equivalents and Short-Term Investments	462.33M	438.02M	645.78M	485.05M	630.69M	769.48M
Total Debt	679.26M	464.72M	418.19M	909.06M	779.63M	369.16M
Total Liabilities	2.55B	2.26B	2.13B	2.61B	2.37B	2.41B
Stockholders Equity	887.83M	956.12M	1.06B	954.00M	913.57M	874.11M
Cash Flow
Free Cash Flow	-68.70M	-23.08M	46.41M	-142.39M	-63.65M	237.21M
Operating Cash Flow	-11.14M	28.65M	64.93M	-109.68M	-28.27M	274.95M
Investing Cash Flow	-201.22M	-180.66M	344.90M	-36.22M	-55.76M	-152.52M
Financing Cash Flow	180.22M	-58.26M	-141.91M	-11.86M	-52.28M	-107.26M

Aecon Group Inc. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 25.06
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

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 25.06 is above the 20-day moving average (MA) of 23.18, above the 50-day MA of 21.19, and above the 200-day MA of 20.49, indicating a bullish trend. The MACD of 0.92 indicates Negative momentum. The RSI at 70.67 is Negative, neither overbought nor oversold. The STOCH value of 88.06 is Negative, 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

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
STN	75 Outperform	$17.38B	39.80	14.26%	0.57%	12.49%	26.18%
MTL	74 Outperform	C$1.23B	12.32	9.99%	5.94%	5.52%	-18.01%
WSP	73 Outperform	C$36.15B	44.94	10.52%	0.54%	18.24%	28.47%
ATRL	72 Outperform	C$16.75B	6.90	57.95%	0.08%	13.07%	697.05%
BDT	71 Outperform	C$1.68B	16.97	25.25%	2.70%	8.49%	14.10%
ARE	66 Neutral	C$1.55B	62.15	2.78%	3.03%	20.53%	74.96%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%

Aecon Group Inc. Corporate Events

Aecon Group Inc. Expands U.S. Industrial Footprint with Bodell Construction Acquisition

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.

Aecon Secures $1.4 Billion Subway Extension Contract in Ontario

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.

Aecon Group Achieves Record Backlog and Revenue Growth in Q2 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.

Aecon Group Inc. Schedules Q2 2025 Financial Results Release

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.

Aecon Group Inc. Announces AGM Results and Dividend Declaration

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.

Aecon Secures Major Contract for Darlington New Nuclear Project

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.