AECOM (ACM, Financial), a multinational engineering company, fell 1.96% between May 21 and May 25. The company, which is among those slated to benefit the most from the Trump administration's infrastructure plans, announced late last week it secured a $3.1 billion contract with the U.S. Air Force.
According to the terms of the 15-year contract, which was secured by subsidiary JT4 LLC, AECOM will provide support for a number of Joint Range Technical Services.
The company will be responsible for the western test and training ranges, including the operation and maintenance of the facilities, which include the Utah Test and Training Range, Colorado's Space Test and Training Range, California's 412th Test Wing and the Naval Air Warfare Center Weapons Division and Nevada's Test and Training Range.
AECOM's portfolio is spread out to lower risks, with key services areas including designing, construction and infrastructure. The company performs of a range of services from commercial CIPP to working with the defense and infrastructure markets. The two markets account for 70% of the company's profits.
Stock performance
The company is benefitting from higher margin work in the construction sector. AECOM's growth hit 1.3% in the past year, outpacing the industry's 0.7% decline.
AECOM's bottom line continues to be impacted by oil and gas market volatility, which has affected projects and growth. Growth is expected to slow in the near future as oil and gas prices continue to fluctuate.
The company has operations in 150 countries and posted $18.2 billion in revenue in 2017.
AECOM'S stock was down last week on fears that President Trump's infrastructure plan has stalled. Democrats are calling the plan "dead," and little has been done to push a new plan through to lawmakers.
The company has a lot to gain from the infrastructure plan. With 22% of its revenue generated from the federal government last year, AECOM is a trusted service provider. The company's strong financial position allows it to withstand fluctuations in the market.
The company has $867 million in cash, around $1 billion in unused capital and just $3.1 billion in low-cost debt. Its free cash flow is expected to range from $600 million to $800 million in 2018.
Earnings
The company's latest quarterly earnings beat analyst estimates despite the bottom line declining 24.7% year over year. The company posted adjusted earnings per share of 67 cents, higher than the estimate of 65 cents.
Revenue grew to $4.791 billion, an 8.2% increase year over year. Analysts expected the company's revenue to come in at $4.79 billion. Organic growth rose 5%, increasing for the sixth quarter in a row.
Its construction business remains a top producer. Construction services revenue rose to $1.89 billion, up 9% year-over-year. Organic revenue in this segment rose 4% on a constant-currency basis.
Disclosure: The author does not have any stakes in the listed equities.
