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Aecom (ACM) Down 1.5% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Aecom Technology (ACM - Free Report) . Shares have lost about 1.5% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Aecom due for a breakout? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent drivers for AECOM before we dive into how investors and analysts have reacted as of late.
ACM Q3 Earnings and Revenues Miss on Construction Management Charge
AECOM reported a sharp third-quarter fiscal 2026 earnings miss as a Construction Management project charge pushed adjusted EPS to a loss of 50 cents. Adjusted EPS fell 137.3% from $1.34 a year ago and missed the Zacks Consensus Estimate of $1.49 by 133.6%.
Net service revenues (NSR) declined 16% year over year to $1.61 billion, missing the consensus mark of $2.02 billion.
ACM's Construction Charge Pressures Profitability
Consolidated revenues fell 14.2% year over year to $3.59 billion. AECOM reported an operating loss of $76 million against an operating income of $294.1 million a year ago. Adjusted EBITDA was a loss of $8.2 million against income of $312.8 million in the prior-year quarter.
The $337 million pre-tax charge reflected a higher projected cost to complete a Construction Management project, mainly due to lower subcontractor productivity and a delayed timeline. The company expects substantial completion in the second quarter of fiscal 2027.AECOM also expects to pursue claims through dispute resolution, has tightened risk controls since the project was awarded in 2019 and no longer pursues design-build P3 projects in the Construction Management business.
AECOM’s Segment Details
Americas revenues declined 20% year over year to $2.63 billion. NSR fell 29% to $808.4 million, although Americas design NSR increased 6% after adjusting for one fewer working day in the quarter.
Adjusted segment loss from operations was $130.2 million. Excluding the Construction Management charge, adjusted operating margin was 18.0%, down 250 basis points year over year. Americas backlog rose 8% to a record, supported by a 1.8x book-to-burn ratio.
International revenues increased 6% year over year to $953.1 million. NSR rose 4% to $800.5 million, driven by strong growth in the U.K. and Australian markets.
Adjusted operating income advanced 26% to $114.1 million. Adjusted operating margin expanded 240 basis points to 14.3%, aided by stronger growth and restructuring actions taken within the last year. Backlog increased 28% to a record, with a 1.4x book-to-burn ratio.
AECOM's Record Wins Support Backlog Momentum
Third-quarter wins reached a record $4.2 billion, including $4 billion of design wins. The overall book-to-burn ratio was 1.6x, while year-to-date wins rose 29% to $10.5 billion.
The design pipeline also reached a new high despite the record quarterly wins. Design-only backlog stood at $26.14 billion at quarter-end. The U.S. federal defense pipeline was up roughly 30%, Canada delivered double-digit NSR growth and Australia backlog increased more than 40% year over year. Management also highlighted two of the largest contract recompetes in AECOM's history, both with expanded scope.
ACM Cash Flow Feels Construction Headwinds
Operating cash flow declined 66% year over year to $95.2 million, while free cash flow fell 79% to $55.1 million. Management expects cash-use headwinds from Construction Management projects to continue through the fourth quarter of fiscal 2026 and the first half of fiscal 2027.
Cash and cash equivalents were $1.01 billion as of June 30, 2026, compared with $1.59 billion at Sept. 30, 2025. Total debt was $2.75 billion, while net leverage was 1.5x. AECOM expects to return to at least 100% free cash flow conversion over the long term once project-related cash impacts subside.
AECOM Updates FY26 Guidance
AECOM now expects fiscal 2026 adjusted EPS of $3.95-$4.15, adjusted EBITDA of $935-$965 million and NSR of $7.30-$7.35 billion. Free cash flow is projected at approximately $300 million. The update reflects the Construction Management charge, stronger underlying margins and lower NSR growth expectations.
Excluding the charge, guidance calls for adjusted EPS of $5.90-$6.10, adjusted EBITDA of $1,275-$1,305 million and NSR of $7.65-$7.70 billion. AECOM also expects a 17.0% segment adjusted operating margin and a 17.4% adjusted EBITDA margin. The company reaffirmed its fiscal 2026-2029 organic NSR growth CAGR target of 5-8%, a 20%+ margin exit rate by fiscal 2028 and 15%+ adjusted EPS and free cash flow per-share growth CAGR.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, Aecom has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Following the exact same course, the stock has a score of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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 indicates a downward shift. Interestingly, Aecom has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Aecom belongs to the Zacks Engineering - R and D Services industry. Another stock from the same industry, Tetra Tech (TTEK - Free Report) , has gained 0.7% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026.
Tetra reported revenues of $1.11 billion in the last reported quarter, representing a year-over-year change of -3.9%. EPS of $0.42 for the same period compares with $0.43 a year ago.
For the current quarter, Tetra is expected to post earnings of $0.47 per share, indicating a change of +4.4% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Tetra. Also, the stock has a VGM Score of D.
View the Zacks #1 Rank List
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Aecom (ACM) Down 1.5% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Aecom Technology (ACM - Free Report) . Shares have lost about 1.5% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Aecom due for a breakout? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent drivers for AECOM before we dive into how investors and analysts have reacted as of late.
ACM Q3 Earnings and Revenues Miss on Construction Management Charge
AECOM reported a sharp third-quarter fiscal 2026 earnings miss as a Construction Management project charge pushed adjusted EPS to a loss of 50 cents. Adjusted EPS fell 137.3% from $1.34 a year ago and missed the Zacks Consensus Estimate of $1.49 by 133.6%.
Net service revenues (NSR) declined 16% year over year to $1.61 billion, missing the consensus mark of $2.02 billion.
ACM's Construction Charge Pressures Profitability
Consolidated revenues fell 14.2% year over year to $3.59 billion. AECOM reported an operating loss of $76 million against an operating income of $294.1 million a year ago. Adjusted EBITDA was a loss of $8.2 million against income of $312.8 million in the prior-year quarter.
The $337 million pre-tax charge reflected a higher projected cost to complete a Construction Management project, mainly due to lower subcontractor productivity and a delayed timeline. The company expects substantial completion in the second quarter of fiscal 2027.AECOM also expects to pursue claims through dispute resolution, has tightened risk controls since the project was awarded in 2019 and no longer pursues design-build P3 projects in the Construction Management business.
AECOM’s Segment Details
Americas revenues declined 20% year over year to $2.63 billion. NSR fell 29% to $808.4 million, although Americas design NSR increased 6% after adjusting for one fewer working day in the quarter.
Adjusted segment loss from operations was $130.2 million. Excluding the Construction Management charge, adjusted operating margin was 18.0%, down 250 basis points year over year. Americas backlog rose 8% to a record, supported by a 1.8x book-to-burn ratio.
International revenues increased 6% year over year to $953.1 million. NSR rose 4% to $800.5 million, driven by strong growth in the U.K. and Australian markets.
Adjusted operating income advanced 26% to $114.1 million. Adjusted operating margin expanded 240 basis points to 14.3%, aided by stronger growth and restructuring actions taken within the last year. Backlog increased 28% to a record, with a 1.4x book-to-burn ratio.
AECOM's Record Wins Support Backlog Momentum
Third-quarter wins reached a record $4.2 billion, including $4 billion of design wins. The overall book-to-burn ratio was 1.6x, while year-to-date wins rose 29% to $10.5 billion.
The design pipeline also reached a new high despite the record quarterly wins. Design-only backlog stood at $26.14 billion at quarter-end. The U.S. federal defense pipeline was up roughly 30%, Canada delivered double-digit NSR growth and Australia backlog increased more than 40% year over year. Management also highlighted two of the largest contract recompetes in AECOM's history, both with expanded scope.
ACM Cash Flow Feels Construction Headwinds
Operating cash flow declined 66% year over year to $95.2 million, while free cash flow fell 79% to $55.1 million. Management expects cash-use headwinds from Construction Management projects to continue through the fourth quarter of fiscal 2026 and the first half of fiscal 2027.
Cash and cash equivalents were $1.01 billion as of June 30, 2026, compared with $1.59 billion at Sept. 30, 2025. Total debt was $2.75 billion, while net leverage was 1.5x. AECOM expects to return to at least 100% free cash flow conversion over the long term once project-related cash impacts subside.
AECOM Updates FY26 Guidance
AECOM now expects fiscal 2026 adjusted EPS of $3.95-$4.15, adjusted EBITDA of $935-$965 million and NSR of $7.30-$7.35 billion. Free cash flow is projected at approximately $300 million. The update reflects the Construction Management charge, stronger underlying margins and lower NSR growth expectations.
Excluding the charge, guidance calls for adjusted EPS of $5.90-$6.10, adjusted EBITDA of $1,275-$1,305 million and NSR of $7.65-$7.70 billion. AECOM also expects a 17.0% segment adjusted operating margin and a 17.4% adjusted EBITDA margin. The company reaffirmed its fiscal 2026-2029 organic NSR growth CAGR target of 5-8%, a 20%+ margin exit rate by fiscal 2028 and 15%+ adjusted EPS and free cash flow per-share growth CAGR.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, Aecom has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Following the exact same course, the stock has a score of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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 indicates a downward shift. Interestingly, Aecom has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Aecom belongs to the Zacks Engineering - R and D Services industry. Another stock from the same industry, Tetra Tech (TTEK - Free Report) , has gained 0.7% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026.
Tetra reported revenues of $1.11 billion in the last reported quarter, representing a year-over-year change of -3.9%. EPS of $0.42 for the same period compares with $0.43 a year ago.
For the current quarter, Tetra is expected to post earnings of $0.47 per share, indicating a change of +4.4% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Tetra. Also, the stock has a VGM Score of D.