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Why Is AECOM (ACM) Down 3.3% Since the Last Earnings Report?
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A month has gone by since the last earnings report for AECOM (ACM - Free Report) . Shares have lost about 3.3% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
AECOM's Fiscal Q1 Earnings in Line, Guidance Intact
AECOM reported first-quarter fiscal 2017 adjusted earnings per share of $0.53, in line with the Zacks Consensus Estimate. However, the bottom line plunged 22.1% from the year-ago tally of $0.68.
While fall in cost of revenues aided bottom-line growth; prolonged weakness in oil and gas markets which marred the top-line performance, played a major spoilsport offsetting this improvement.
Revenue Performance
For the fiscal first quarter, revenues edged down 1.4% to $4,358.3 million on a year-over-year basis. However, revenues came ahead of the Zacks Consensus Estimate of $4,190 million. Despite growth in organic revenue across all three segments, low energy prices acted as a major dampener, leading to the overall decline.
Segment wise, Design & Consulting Services revenues fell 1.1% year over year to $1,840.8 million. However, on a constant currency basis, organic revenue inched up 1% due to strong growth in the UK as well as Australia. However, lower oil and gas prices proved to be a spoilsport, offsetting much of the organic revenue growth.
Construction Services revenues were up 4.3% to $1,750.2 million on a year-over-year basis. On a constant currency basis, organic revenue was up 2%. Stellar performance of this segment came on the back of impressive growth in Building Construction and Energy & Industrial Construction businesses.
On the other hand, Management Services revenues registered year-over-year growth of 1.4% to $767.3 million. It also grew 1% on an organic basis.
However, AECOM’s adjusted operating income in the reported quarter was $188.2 million, down from the year-ago figure of $219.5 million. New order wins in the quarter totaled $5.9 billion. Notable wins during the quarter include selection of AECOM’s joint venture for the SONGS decommissioning project, major wins in Management Services segment and a large gas power plant in the U.S. Additionally, AECOM’s total book-to-burn ratio during the quarter was 1.3.
At the end of the fiscal first quarter, AECOM had a record total backlog of $43.8 billion, up 2%, thereby signaling bright prospects.
Liquidity & Cash Flow
As of Dec 31, 2016, AECOM’s cash and cash equivalents summed $697.7 million compared with $658.0 million as of Dec 31, 2015. Total debt was $4,164.0 million compared with $4,522.9 million on Dec 31, 2015.
AECOM generated free cash flow of $56.5 million in this quarter, down 26.8% year over year.
2017 Guidance
AECOM reiterated its fiscal 2017 guidance. The company expects earnings per share to be in the range of $2.80–$3.20. This figure includes roughly $0.20 of anticipated gains related to AECOM Capital realizations. For fiscal 2017, AECOM anticipates effective tax rate of 20% on adjusted earnings.
In terms of spending, the company projects to incur $30 million in relation to acquisition and integration, capital expenditure of $115 million and depreciation expense of $165 million. Expenses related to amortization of intangible assets are likely to be $95 million.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
At this time, AECOM's stock has a Growth Score of 'C', however its Momentum is doing a bit better with a 'B'. Charting a somewhat similar path, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for value investors than momentum investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Why Is AECOM (ACM) Down 3.3% Since the Last Earnings Report?
A month has gone by since the last earnings report for AECOM (ACM - Free Report) . Shares have lost about 3.3% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
AECOM's Fiscal Q1 Earnings in Line, Guidance Intact
AECOM reported first-quarter fiscal 2017 adjusted earnings per share of $0.53, in line with the Zacks Consensus Estimate. However, the bottom line plunged 22.1% from the year-ago tally of $0.68.
While fall in cost of revenues aided bottom-line growth; prolonged weakness in oil and gas markets which marred the top-line performance, played a major spoilsport offsetting this improvement.
Revenue Performance
For the fiscal first quarter, revenues edged down 1.4% to $4,358.3 million on a year-over-year basis. However, revenues came ahead of the Zacks Consensus Estimate of $4,190 million. Despite growth in organic revenue across all three segments, low energy prices acted as a major dampener, leading to the overall decline.
Segment wise, Design & Consulting Services revenues fell 1.1% year over year to $1,840.8 million. However, on a constant currency basis, organic revenue inched up 1% due to strong growth in the UK as well as Australia. However, lower oil and gas prices proved to be a spoilsport, offsetting much of the organic revenue growth.
Construction Services revenues were up 4.3% to $1,750.2 million on a year-over-year basis. On a constant currency basis, organic revenue was up 2%. Stellar performance of this segment came on the back of impressive growth in Building Construction and Energy & Industrial Construction businesses.
On the other hand, Management Services revenues registered year-over-year growth of 1.4% to $767.3 million. It also grew 1% on an organic basis.
However, AECOM’s adjusted operating income in the reported quarter was $188.2 million, down from the year-ago figure of $219.5 million. New order wins in the quarter totaled $5.9 billion. Notable wins during the quarter include selection of AECOM’s joint venture for the SONGS decommissioning project, major wins in Management Services segment and a large gas power plant in the U.S. Additionally, AECOM’s total book-to-burn ratio during the quarter was 1.3.
At the end of the fiscal first quarter, AECOM had a record total backlog of $43.8 billion, up 2%, thereby signaling bright prospects.
Liquidity & Cash Flow
As of Dec 31, 2016, AECOM’s cash and cash equivalents summed $697.7 million compared with $658.0 million as of Dec 31, 2015. Total debt was $4,164.0 million compared with $4,522.9 million on Dec 31, 2015.
AECOM generated free cash flow of $56.5 million in this quarter, down 26.8% year over year.
2017 Guidance
AECOM reiterated its fiscal 2017 guidance. The company expects earnings per share to be in the range of $2.80–$3.20. This figure includes roughly $0.20 of anticipated gains related to AECOM Capital realizations. For fiscal 2017, AECOM anticipates effective tax rate of 20% on adjusted earnings.
In terms of spending, the company projects to incur $30 million in relation to acquisition and integration, capital expenditure of $115 million and depreciation expense of $165 million. Expenses related to amortization of intangible assets are likely to be $95 million.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
AECOM Price and Consensus
AECOM Price and Consensus | AECOM Quote
VGM Scores
At this time, AECOM's stock has a Growth Score of 'C', however its Momentum is doing a bit better with a 'B'. Charting a somewhat similar path, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for value investors than momentum investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.