A month has gone by since the last earnings report for Aecom Technology (ACM Quick QuoteACM - Free Report) . Shares have lost about 12% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Aecom due for a breakout? 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 Q1 Earnings Lag Estimates, Revenues Down Y/Y, Backlog Up Y/Y

AECOM reported first-quarter 2025 results, where earnings missed the Zacks Consensus Estimate and declined on a year-over-year basis. Both revenues and net service revenues (NSR) increased from the prior-year quarter.

Delving Deeper Into AECOM’s Q1 Results

The company reported adjusted earnings per share (EPS) of $1.29, which missed the consensus mark of $1.41 by 8.5% and decreased 1.5% from the prior-year quarter. 

Revenues of $4.01 billion declined 4.6% year over year to $3.8 billion. NSR of $1.85 billion increased 2.7% year over year.

Total backlog at the fiscal first-quarter end was a new record high of $25.96 billion, up 9% from the year-ago period, highlighted by a solid 1.5x book-to-burn ratio. This marks the 21st consecutive quarter with a book-to-burn ratio above 1.0, reflecting sustained demand. Additionally, the company’s pipeline of opportunities reached an all-time high, which increased by double digits. This growth is being driven by strong growth across both the Americas and International segments, which is creating more project opportunities. Also, AECOM’s design backlog rose 7.6%.

AECOM’s Segment Details

Americas’ revenues were $3 billion during the reported quarter, down 4% from the prior-year quarter’s levels primarily due to a reduction in pass-through revenue. NSR of $1.1 billion moved up 9% year over year. 

Adjusted operating income of $214 million was up 9% year over year. Adjusted operating margin (on an NSR basis) expanded 120 basis points (bps) year over year to a new high of 19.9%. This growth was driven by the ongoing execution of initiatives to deliver expanding operating leverage, as well as strong execution and growth.

The total backlog at the end of the fiscal first quarter was $18 billion compared with $17.5 billion a year ago.

International revenues were down 5% year over year to $854 million. Nonetheless, NSR remained unchanged year over year at $736 million.

Adjusted operating income remained unchanged year over year at $81 million. Adjusted operating margin (on an NSR basis) moved up 20 bps year over year to 11%. This rise was caused by a combination of strong execution, operational efficiencies, and a focus on high-returning markets and clients.

The total backlog at the end of the fiscal first quarter was $7.93 billion, up from $6.37 billion a year ago.

AECOM Capital reported an operating loss of $1.1 million during the period.

Operating Highlights of AECOM

Adjusted segment operating profit amounted to $264 million, up 10% from the year-ago quarter. The segment’s adjusted operating margin improved 100 bps to 16.4%.

Adjusted EBITDA rose 6% year over year to $287 million. Adjusted EBITDA margin of 16.4% also rose 80 bps year over year.

Liquidity & Cash Flow of AECOM

At the end of the fiscal first quarter, AECOM’s cash and cash equivalents totaled $1.25 billion, down from $1.59 billion at fiscal 2024-end. The total debt (excluding unamortized debt issuance costs) as of Dec. 31, 2025, was $2.738 billion, down from $2.744 billion at Sept. 30, 2025.

At the fiscal first-quarter end, operating cash flow decreased 54% year over year to $70 million. Adjusted free cash flow also declined 62% to $42 million year over year.

AECOM Revises FY26 Guidance

AECOM is more optimistic about fiscal 2026 performance and has raised its earnings expectations, mainly because of solid performance in the design business, a capital allocation strategy and a record backlog and project pipeline, which improves revenue visibility for the year.

It is now expecting adjusted EPS in the range of $5.85-$6.05 (prior expectation was between $5.65 and $5.85). This indicates a 12% improvement from fiscal 2025 levels on a constant-currency basis, considering the midpoint of the guidance.

AECOM expects adjusted EBITDA in the range of $1,270-$1,305 million (prior expectation was between $1,265 and $1,305 million). This indicates 7% year-over-year growth at the midpoint.

Free cash flow is still expected to be approximately $400 million. ACM is expecting a segment-adjusted operating margin of 16.8% and an adjusted EBITDA margin of 17.0%, both of which are broadly consistent with prior expectations.

In addition, the company reaffirmed its long-term financial targets, including achieving a 20%+ margin exit rate by fiscal 2028 and delivering adjusted EPS growth at a 15%+ CAGR from fiscal 2026 through fiscal 2029.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a upward trend in fresh estimates.

The consensus estimate has shifted 12.77% due to these changes.

VGM Scores

Currently, Aecom has a average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a score 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Aecom has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.