It has been about a month since the last earnings report for Aecom Technology (ACM Quick QuoteACM - Free Report) . Shares have added about 11% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Aecom due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

AECOM (ACM Quick QuoteACM - Free Report) Q1 Earnings & Revenues Beat Estimates

AECOM reported first-quarter fiscal 2021 results, wherein earnings and revenues beat the respective Zacks Consensus Estimate. Furthermore, the company increased its fiscal 2021 guidance.

Gaurav Kapoor, AECOM’s chief financial officer said, “The inherent attributes of our business, including a strong backlog, highly variable cost structure, diverse client base, and an agile culture, position us well to perform across varied market trends and give us confidence to deliver on our strategic and financial commitments."

Delving Deeper

Adjusted earnings per share of 62 cents topped the consensus mark of 57 cents by 8.8% and grew 35% year over year. Revenues of $3,313.2 million beat the Zacks Consensus Estimate of $3,206 million by 3.3% and grew 2.4% year over year.

Improved profitability reflects the company’s efforts to transform itself into a higher-margin and lower-risk Professional Services business.

Segment Details

AECOM reports through three segments — Americas, which consists of the business in the United States, Canada and Latin America; International, which includes the businesses in Europe, the Middle East and Africa (EMEA), along with the Asia-Pacific regions; and AECOM Capital.

Americas revenues were up 4.3% year over year to $2,557.3 million. However, net service revenues or NSR of $863 million for the quarter dropped 1% year over year on a constant-currency organic basis due to two additional available workdays in the prior year. Adjusted operating income of $150.7 million was up 1% year over year. Adjusted operating margin (on an NSR basis) expanded 80 basis points or bps. This upside reflects the benefits of the actions taken to boost margins, and investments in technology, shared service centers, as well as design centers to improve project delivery efficiencies.

International revenues dropped 3.5% on a year-over-year basis to $755.6 million. On a constant-currency organic basis, NSR decreased 3% from a year ago to $613 million for the quarter. Adjusted operating income in the segment rose 43.7% year on year to $43.1 million. Adjusted operating margin (on an NSR basis) jumped 230 bps to 7%. Actions taken to improve margins included consolidating real estate, implementing a streamlined G&A structure and exiting lower-returning countries.

AECOM Capital (ACAP) — which develops real estate, public private partnership and infrastructure projects — contributed $284 million to total revenues versus $533 million a year ago.

Operating Highlights

Adjusted segment operating margin for the quarter amounted to 13.1%, up 140 bps from the year-ago level. This marked a record high first fiscal-quarter level. Adjusted EBITDA grew 9% year over year to $189 million.

At fiscal first quarter-end, the company’s total backlog was $39.7 billion, up 8% from the prior-year figure. Backlog in the design business grew 9% from a year ago and contracted backlog across the Professional Services business increased 13% to a record level.

Liquidity & Cash Flow

As of Dec 31, 2020, AECOM’s cash and cash equivalents totaled $1,044.7 million, down from $1,708.3 million at fiscal 2020-end. As of fiscal first quarter-end, total debt (excluding unamortized debt issuance cost) was $2,090.7 million, marginally up from $2,085 million at fiscal 2020-end. AECOM has executed $630 million of stock repurchases since the beginning of September 2020 at an average price of $45 per share. This has reduced the share count by 9% to date. The company has $825 million of capacity remaining under the $1-billion share repurchase authorization.

Other Updates

AECOM wrapped up the sale of Power construction and Civil construction businesses in October 2020 and January 2021, respectively. Results for discontinued operations included a $70-million loss related to the disposition of these businesses.

Fiscal 2021 Guidance Lifted

Adjusted EPS is now expected in the range of $2.60-$2.80 versus prior expectation of $2.55-$2.75. It expects to deliver 20% adjusted EPS improvement in fiscal 2021 at the mid-point of the guided range. AECOM reiterated its adjusted EBITDA guidance in the range of $790-$830 million, indicating 9% year-over-year growth at midpoint. The company reiterated free cash flow projection of $425-$625 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month.

VGM Scores

Currently, Aecom has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% 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.

Outlook

Aecom has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.