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AECOM (ACM) to Report Q2 Earnings: What's in the Offing?

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AECOM (ACM - Free Report) is scheduled to report second-quarter fiscal 2023 results on May 8, after market close.

In the last reported quarter, ACM’s earnings beat the Zacks Consensus Estimate by 4.9% but declined 3% year over year. Net sales beat the consensus mark by 1.4% and rose 3.5% year over year.

AECOM’s earnings topped the consensus mark in 10 of the last 12 quarters and met it twice.

Trend in Estimate Revision

For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has been unchanged at 88 cents in the past 60 days. The estimated figure indicates a 6% increase from the year-ago quarter’s reported level. The consensus mark for net sales is pegged at $3.31 billion, suggesting 3.1% growth from the year-ago reported figure of $3.21 billion.

Key Factors to Note

AECOM is expected to have reported strong revenues and earnings in the fiscal second quarter. The company has been gaining from strength in the design business, thanks to the impressive Americas and International markets.

The Zacks Consensus Estimate for Americas segment's sales is pegged at $2,516 million, suggesting an increase from the $2,400 million reported in the year-ago period. The Zacks Consensus Estimate for the International segment's sales is pegged at $803 million, down from the $813.3 million reported in the year-ago quarter.

The company’s Think and Act Globally strategy, a record design backlog and a pipeline of opportunities continue to be strong. Its net service revenues or NSR — defined as revenues excluding subcontractor and other direct costs — have been benefiting from strength across core transportation, water and environment markets.

The Zacks Consensus Estimate for total Backlog is pegged at $41.487 billion, suggesting an increase from the year-ago level of $40.796 billion.

The Zacks Consensus Estimate for net service revenues (NSR) is pegged at $1,619 million, suggesting a slight increase from the year-ago reported level of $1,614 million.

Also, its focus on ESG or Environmental, Social and Governance bodes well. Demand for AECOM’s technical, advisory and program management capabilities has been increasing on an improving funding environment, as well as rising demand for ESG-related services.

AECOM has undertaken certain restructuring moves to improve profitability and de-risk the business profile. These moves have been helping ACM reduce costs and simplify its operating structure. These strategic initiatives are likely to have benefitted the company’s bottom line in the fiscal second quarter.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for AECOM this time around. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as elaborated below.

Earnings ESP: Otis has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Currently, AECOM carries a Zacks Rank #3.

A Stock With the Favorable Combination

Here is a company in the Zacks Construction sector that, according to our model, has the right combination of elements to beat on earnings in its respective quarter to be reported.

Based in Winchester, VA, Trex Company, Inc. (TREX - Free Report) , which manufactures and distributes decking, railing, and outdoor living products and accessories, beat on earnings in three of the trailing four quarters and missed on the same on a single occasion, the average surprise being 7.2%.

Trex has an Earnings ESP of +6.06% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Peer Releases

Quanta Services Inc. (PWR - Free Report) reported better-than-expected results for first-quarter 2023, wherein adjusted earnings and revenues surpassed the Zacks Consensus Estimate.

The company continues to experience high demand for its infrastructure solutions that support energy transition initiatives and increase reliability, safety and efficiency. Notably, project activity associated with renewable generation has been going strong and is expected to continue throughout the year.

KBR, Inc. (KBR - Free Report) reported strong results in first-quarter 2023, wherein earnings and revenues surpassed the Zacks Consensus Estimate and increased on a year-over-year basis.

KBR’s top and bottom lines gained on strong underlying growth and margin expansion, as well as excellent bookings in the reported quarter.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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