Back to top

Image: Bigstock

AECOM (ACM) to Offload Oil & Gas Unit, De-Risk Business

Read MoreHide Full Article

AECOM (ACM - Free Report) inked a deal with the affiliates of Graham Construction to sell its Oil & Gas maintenance and turnaround services business. The deal is expected to close in second-quarter fiscal 2022 and is subject to customary closing conditions and regulatory approvals. The Oil & Gas maintenance and turnaround services business is now included in discontinued operations.

Troy Rudd, AECOM’s chief executive officer, said, “Today’s announcement furthers the execution of our strategy to focus our efforts exclusively on our higher-margin and lower-risk Professional Services business.”

Apart from the divesture announcement, this infrastructure consulting firm has received a four-year secondment contract with the Qatar’s Public Works Authority — Ashghal — to provide management and oversight of Ashghal’s Local Roads and Drainage Program. Per the contract, AECOM’s more than 200 professional staff members will work within Ashghal’s Roads Projects Department to modernize and expand Qatar’s surface transport network, improving its accessibility, safety and sustainability for all residents.

Restructuring Plan & Solid Project Execution Aids AECOM

AECOM is a leading solutions provider for supporting professional, technical and management solutions for diverse industries across end markets like transportation, facilities, government as well as environmental, energy, and water businesses. The major part of the U.S. government’s broad infrastructural plan is focused on transit and water markets, wherein AECOM enjoys a dominant position.

AECOM has been executing a plan to transform the company into a pure-play professional services firm to improve profitability and de-risk the business profile. To that end, it is in the process of exiting more than 30 countries globally to prioritize investments in markets with higher prospects and competitive advantages. In 2020, AECOM completed the sale of the management services business and the Power construction business.

Currently, this leading professional, technical and management solution provider has been witnessing a robust pipeline of pursuits across the business. The company’s net service revenues or NSR — defined as revenues excluding subcontractors and other direct costs — are benefiting from strength across the core transportation, water and environment markets.

Zacks Investment ResearchImage Source: Zacks Investment Research

The stock has rallied 38.5% in the year-to-date period compared with the industry’s 29.4% growth. Earnings estimates for fiscal 2022 have moved up 3.1% in the past 30 days, depicting analysts' optimism over bottom-line growth potential. The Zacks Consensus Estimate for the Zacks Rank #3 (Hold) company’s fiscal 2022 earnings indicates a 17% increase from the 2021 level. AECOM currently has good visibility into growth and a strong backlog for the upcoming quarters.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some Top-Ranked Stocks in the Home Building Industry

Beazer Homes USA, Inc. (BZH - Free Report) currently sports a Zacks Rank #1. This Atlanta-based homebuilder continues to gain from strong operational execution and persistent strength in the housing market.

Beazer Homes’ shares have gained 29.6% year to date compared with the industry’s 23.6% rally. Earnings are expected to rise 23.7% in fiscal 2022.

TRI Pointe Group Inc. (TPH - Free Report) currently carries a Zacks Rank #2. This Irvine, CA-based homebuilder designs, constructs and sells single-family detached and attached homes in the United States. Robust demand and pricing as well as improved operating leverage, have been driving TRI Pointe's performance. Cost-cutting initiatives implemented earlier this year and focus on entry-level buyers have been adding to the positives.

TRI Pointe’s shares have surged 44.7% year to date. Earnings for 2021 and 2022 are expected to rise 80.2% and 9.6%, respectively.

Meritage Homes Corporation (MTH - Free Report) currently sports a Zacks Rank #1. Based in Scottsdale, AZ, Meritage Homes is one of the leading designers and builders of single-family homes. Its focus on entry-level LiVE.NOW homes has been a major driving factor.

MTH has gained 36.2% year to date. Earnings are expected to grow 74.6% in 2021 and 22.2% in the next year.