AECOM (ACM Quick QuoteACM - Free Report) has plunged 21.1% in the past three months, underperforming the Zacks Engineering - R and D Services industry, the broader Zacks Construction sector and the S&P 500 index.

This Texas-based provider of professional, technical and management solutions is primarily hurt by broader macroeconomic risks rather than company-specific headwinds. The public infrastructure and services companies in the United States are currently facing pressures due to tariff and trade policy uncertainties, alongside elevated structural inflation in labor and material costs. Hence, ACM’s business portfolio, being directly aligned to these market aspects, cannot shake off the uncertainties even with its in-house business strategies.

Nonetheless, even if these near-term uncertainties are plaguing the company’s growth prospects, its strong backlog momentum and growing international demand for its services are boosting mid and long-term prospects. Besides, AECOM’s emphasis on investments in proprietary AI and digital delivery capabilities is an additional tailwind.

Image Source: Zacks Investment Research

Let us decode the positive and negative factors shaping ACM stock’s prospects.

Factors Driving AECOM’s Growth Momentum

Record Backlog Reflects Strong Infrastructure Demand: AECOM continues to benefit from powerful infrastructure spending trends across transportation, water, environmental services, energy and defense markets. The company ended the second quarter of fiscal 2026 with a record backlog of $26.2 billion, up 8% year over year, supported by a healthy 1.2x design book-to-burn ratio and double-digit pipeline growth. Demand remains robust as governments worldwide invest in infrastructure resilience, grid modernization, water systems and transportation upgrades.

In the United States, more than half of the Infrastructure Investment and Jobs Act funding remains available, providing a multiyear tailwind. Besides, strong project wins across the United Kingdom, Canada, Australia and the Middle East further reinforce ACM’s ability to convert favorable industry trends into sustainable revenue and earnings growth.

Strategic Initiatives Support Long-Term Growth: AECOM is proactively expanding beyond its traditional engineering and design roots through investments in proprietary AI solutions and its rapidly growing Advisory business. Management noted that AI capabilities are already helping secure major project wins, particularly in energy and infrastructure markets, while improving operational efficiency and client value. The Advisory segment has delivered double-digit net service revenue growth and remains on track to double its size within three years.

These initiatives help diversify revenue streams and reduce dependence on cyclical construction activity. Combined with exposure to emerging opportunities such as AI-related infrastructure, data centers, energy transition projects, nuclear fusion and defense modernization, the company is strengthening its competitive moat and positioning itself for durable mid- and long-term growth. AECOM reaffirmed its long-term financial targets, including achieving a more than 20% margin exit rate by fiscal 2028 and delivering adjusted EPS growth of more than 15% CAGR from fiscal 2026 through fiscal 2029.

Raised Fiscal 2026 Guidance Signals Confidence: AECOM’s decision to raise fiscal 2026 earnings guidance for a second consecutive quarter highlights management’s confidence in its execution capabilities and growth outlook. The company now expects adjusted EPS of $5.90-$6.10 (from $5.85-$6.05), representing roughly 14% year-over-year growth at the midpoint, while adjusted EBITDA guidance was increased to $1.275-$1.305 billion (from $1.270-$1.305 billion), reflecting 7% year-over-year growth at the midpoint. The revised outlook reflects strong first-half operating performance, expanding margins, record backlog levels and continued success in capital allocation initiatives.

Importantly, management reaffirmed expectations for 6-8% net service revenue growth and approximately $400 million in free cash flow despite temporary cash collection delays in the Middle East. With improving earnings visibility, healthy demand trends and a robust project pipeline, ACM appears well-positioned to meet its near-term targets while advancing toward its longer-term profitability and earnings growth objectives.

Earnings Estimate Revision of ACM

ACM’s earnings estimates for fiscal 2026 and fiscal 2027 have trended upward in the past 60 days. The revised estimates for fiscal 2026 and fiscal 2027 imply year-over-year growth of 13.5% and 13.1%, respectively.

Image Source: Zacks Investment Research

ACM Stock Trading at a Discount

ACM stock is currently trading at a discount compared with the industry peers, with a forward 12-month price-to-earnings (P/E) ratio of 10.9, as evidenced by the chart below.

Image Source: Zacks Investment Research

AECOM’s AI Edge: Enough to Beat Industry Giants?

Rising global investments in transportation, water, energy, defense, digital infrastructure and AI-driven data-center development are proving incremental for AECOM, alongside other big giants, including MasTec, Inc. (MTZ Quick QuoteMTZ - Free Report) , KBR, Inc. (KBR Quick QuoteKBR - Free Report) and Jacobs Solutions Inc. (J Quick QuoteJ - Free Report) . However, each firm serves these markets differently.

MasTec focuses primarily on infrastructure construction, communications networks, power delivery and renewable energy deployment. Meanwhile, KBR leverages its strong presence in defense, national security, space, energy transition and mission-critical government services. On the other hand, Jacobs combines engineering expertise with advanced consulting, environmental solutions and life sciences capabilities.

AECOM differentiates itself through its comprehensive infrastructure lifecycle model, spanning advisory, planning, design, engineering and program management across virtually every major infrastructure end market.

Among MasTec, KBR and Jacobs, ACM arguably holds a competitive edge in the breadth of its infrastructure exposure, record backlog visibility, global scale and integrated service offerings. Its combination of technical expertise, AI-enabled solutions and diversified infrastructure portfolio provides a durable advantage as governments and private clients accelerate spending on resilient and digitally connected infrastructure.

What is Restricting ACM’s Prospects?

Macroeconomic Risks & Funding Uncertainty: Despite benefiting from long-term infrastructure megatrends, AECOM remains exposed to broader macroeconomic and policy uncertainties in the United States. A significant portion of its business relies on public-sector infrastructure spending, making future growth partly dependent on government budget priorities, funding approvals and political stability. While the Infrastructure Investment and Jobs Act continues to support demand, potential changes in federal spending priorities, government shutdown risks, fiscal tightening and delays in project approvals could affect the pace of contract awards.

Higher interest rates, inflationary pressures and economic slowdowns may also reduce state and local government spending capacity and discourage private-sector investment in transportation, commercial development and energy projects. These uncertainties could slow backlog conversion, delay revenue recognition and limit the company's ability to sustain its current growth trajectory.

Contract Execution Risks: AECOM's business model depends heavily on the successful execution of large, complex and multi-year government-funded projects across transportation, water, environmental remediation, defense and energy markets. Such contracts often involve stringent compliance requirements, cost controls, regulatory oversight and schedule commitments. Unexpected design modifications, permitting delays, labor shortages, supply-chain disruptions or disputes with project stakeholders can increase costs and reduce profitability. The company has also disclosed claim-resolution delays and project-related issues that have periodically affected cash flow and earnings visibility.

Can ACM Stock Rebound From Its Current Position?

AECOM's recent share-price decline appears more due to macroeconomic uncertainty, funding concerns and investor caution toward infrastructure-related names than to deterioration in the company's fundamentals. In fact, the company continues to execute well, as evidenced by record backlog growth, expanding margins, upward earnings estimate revisions and a second consecutive increase in fiscal 2026 guidance. Long-term growth drivers, including transportation modernization, water infrastructure upgrades, energy transition projects, defense spending and AI-related infrastructure investments, remain firmly intact.

However, near-term visibility is still clouded by policy uncertainty, inflationary pressures, contract-execution risks and potential delays in government-funded projects. While ACM's discounted valuation and improving earnings outlook make the stock increasingly attractive, the current environment does not yet provide a clear catalyst for an immediate rebound.

With a Zacks Rank #3 (Hold), ACM stock appears positioned for solid long-term appreciation, but it may be premature to aggressively buy the stock solely in anticipation of a near-term recovery. Existing investors may consider holding their positions, while prospective investors could benefit from waiting for greater macroeconomic clarity or a more favorable entry point before building meaningful exposure. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.