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AECOM (ACM) Secures Key Contract for Toronto's Ontario Line

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AECOM (ACM - Free Report) has been selected as part of the Pape North Connect Team to deliver the Pape Tunnel and Underground Stations (PTUS) contract for Toronto's Ontario Line. This significant 15.6-kilometer rapid transit project aims to enhance accessibility and cut travel time for commuters.

Under the PTUS contract, this renowned infrastructure consulting firm’s responsibilities encompass designing three kilometers of twin tunnels beneath Pape Avenue, two underground stations, emergency exit and service buildings, and a crucial crossover section. The project, anticipated to generate numerous job opportunities annually during construction, will substantially benefit more than 227,500 Toronto residents by providing convenient access to Ontario Line stations.

AECOM's expertise in tunneling and transit design positions the company advantageously for large-scale projects like this. Through collaboration with Metrolinx, AECOM aims to deliver a sustainable transit solution that not only offers reliable access but also mitigates traffic congestion and reduces environmental impact.

The PTUS contract, executed under a Development and Master Construction Agreement with Metrolinx, adopts a multi-stage design process facilitating a collaborative approach between the stakeholders. Pape North Connect, a consortium comprising AECOM and other industry leaders, will spearhead the project's execution.

With this win, AECOM will lead technical design efforts for the entire tunnel works and three interchange stations along the Ontario Line Subway, cementing its pivotal role in shaping Toronto's future transit landscape.

Share Price Performance

AECOM has been gaining from high-returning organic growth initiatives. In the first quarter of fiscal 2024, revenues of $3.9 billion rose 15% on a year-over-year basis. Adjusted net service revenues (NSR) moved up 7% to $1.71 billion. Organic NSR in the design business recorded year-over-year growth of 8%, led by the water and transportation markets, and 9% growth in the Americas.
 

Zacks Investment Research
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In the past six months, shares of the company have risen 1.5% compared with the Zacks Engineering - R and D Services industry’s 12.4% growth. Although shares of AECOM have underperformed its industry, its solid backlog level depicts strong growth potential. As of the fiscal first-quarter end, the total backlog came in at $39.81 billion. The current backlog level includes 56.5% contracted backlog growth.

During the fiscal first quarter, a record-high 9% growth in the design business backlog (on a constant currency basis) was driven by a near-record win rate and continued strong end-market trends. The contracted backlog in the design business rose 17%, supported by funding strength across the key markets.

Zacks Rank & Key Picks

AECOM currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks that warrant a look in the sector are as follows:

Advanced Drainage Systems, Inc. (WMS - Free Report) currently sports a Zacks Rank of 1 (Strong Buy). WMS delivered a trailing four-quarter earnings surprise of a whopping 37.1%, on average. The stock has gained 32.3% in the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for WMS’ 2024 EPS has increased to $5.79 from $5.62 over the past 30 days.

Masco Corporation (MAS - Free Report) currently carries a Zacks Rank #2 (Buy).

Masco’s earnings per share (EPS) estimates for 2024 have increased to $4.10 from $3.98 over the past 30 days. This leading manufacturer of branded home improvement and building products has a trailing four-quarter earnings surprise of 23.4%, on average. Shares of MAS have rallied 32.6% in the past six months.

Armstrong World Industries, Inc. (AWI - Free Report) currently carries a Zacks Rank of 2. AWI delivered a trailing four-quarter earnings surprise of 13.1%, on average. It has surged 62.5% in the past six months.

The Zacks Consensus Estimate for AWI’s EPS for 2024 has increased to $5.65 from $5.48 over the past 30 days.

Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.

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