RBC Capital has boosted its price target for Aecom (ACM, Financial) from $123 to $126 while maintaining an Outperform rating. This decision follows Aecom's solid performance in the second quarter, where it reported strong results and slightly raised the lower end of its projected adjusted EBITDA and EPS guidance for fiscal year 2025 for the second consecutive quarter. Despite some earlier concerns related to DOGE, Aecom's recent performance has reassured investors, according to RBC's analysis.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 10 analysts, the average target price for AECOM (ACM, Financial) is $121.75 with a high estimate of $140.00 and a low estimate of $112.00. The average target implies an upside of 18.96% from the current price of $102.35. More detailed estimate data can be found on the AECOM (ACM) Forecast page.
Based on the consensus recommendation from 13 brokerage firms, AECOM's (ACM, Financial) average brokerage recommendation is currently 1.8, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for AECOM (ACM, Financial) in one year is $113.77, suggesting a upside of 11.16% from the current price of $102.345. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the AECOM (ACM) Summary page.
ACM Key Business Developments
Release Date: May 06, 2025
- Net Service Revenue (NSR): Record second quarter NSR with growth highest in the Americas.
- Segment Adjusted Operating Margin: Increased by 90 basis points to 16.1%, a second quarter record.
- Adjusted EBITDA: Increased by 8% to $290 million, setting a new second quarter high.
- Adjusted EPS: Increased by 20% to $1.25, also a new second quarter high.
- Free Cash Flow: Increased by 141% to $178 million in the quarter.
- Shareholder Returns: $110 million returned through share repurchases and dividends in the quarter, $165 million in the first half.
- Backlog: Increased to a new record with a 1.1x book-to-burn ratio.
- Americas Segment Margin: Adjusted operating margin increased by 130 basis points to 19.4%.
- International Segment Margin: Increased by 10 basis points to 11.1%.
- Net Leverage: Maintained at 0.7x.
- Guidance: Increased midpoints of adjusted EBITDA and EPS for the full year, expected to increase 9% and 14% from the prior year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- AECOM (ACM, Financial) achieved record second quarter net service revenue (NSR), margins, and earnings per share (EPS), with significant growth in the Americas region.
- The company was ranked as the number one overall design firm by ENR, affirming its leadership position in key markets such as Transportation, Water, and Facilities.
- AECOM (ACM) was appointed as the sole venue infrastructure partner for the LA28 Olympic and Paralympic Games, showcasing its expertise in managing large, complex projects.
- The company's backlog reached a new record high, driven by a 1.1x book-to-burn ratio, indicating strong future growth potential.
- AECOM (ACM) reported a 141% increase in free cash flow for the quarter, allowing for significant shareholder returns through share repurchases and dividends.
Negative Points
- AECOM (ACM) experienced isolated delays and deferred decisions on certain projects, impacting top-line growth.
- The company faced fewer workdays in the quarter due to holiday timing, reducing NSR growth by approximately 100 basis points.
- There were changes in a small number of government contracts following US Federal agency reviews, resulting in the removal of approximately $100 million from the backlog.
- Near-term trends in the International segment remain mixed, with larger transportation projects in the UK facing delays due to budgetary challenges.
- The transportation market in Australia experienced a pause following a decade of robust investment, impacting growth in that region.
