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MarketScreener Homepage  >  Equities  >  Nyse  >  AECOM    ACM

AECOM

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Aecom : Construction Firm Aecom Gives Soft View For Earnings, But CEO Is Upbeat -- Update

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11/14/2016 | 01:52pm EST
By Doug Cameron and Joshua Jamerson 

Infrastructure projects backed by state ballot initiatives and higher gasoline taxes will drive a surge in domestic spending even before any bump from the new administration's spending pledge, the chief executive of Aecom said Monday.

Michael Burke said voters last week passed $200 billion in infrastructure projects being tracked by the Los Angeles-based company that are expected to spur rapid growth in 2018.

President-elect Donald Trump's election-night focus on boosting spending on domestic infrastructure drove a rally in construction-related stocks last week that continued Monday, despite uncertainty over the incoming administration's specific funding plans and priorities.

Mr. Burke said expected changes in energy policy were expected to reverse some of the weakness in segments such as pipelines, but state-funded projects already provided reason for optimism.

"I don't think we've ever been more bullish on the future of infrastructure in North America," Mr. Burke said on a call after Aecom reported quarterly profits that undershot analysts' expectations alongside guidance for next year that also fell short.

State and local spending typically accounts for 75% of the public sector share of domestic infrastructure investment in projects such as roads and water treatment facilities, with the federal budget paying for the balance.

Mr. Trump had pledged on the campaign trail to invest $1 trillion over 10 years on a variety of infrastructure projects if elected, and analysts said his win could ease the passage next year of an infrastructure spending bill already being considered by Congress.

The plans hinge on unlocking more private sector spending that is dependent on establishing revenue streams such as road and bridge tolls to pay down debt as well as securing regulatory approvals and public sector contributions.

Aecom shares climbed after Mr. Burke's remarks, having nursed an early loss following the 2017 guidance. Shares were up more than 6.4% at $34.29 in Monday afternoon trading.

The company forecast adjusted profit in 2017 in a range of $2.70 to $3.10 a share, compared with the consensus estimate from analysts of $3.24 a share, according to FactSet. Fourth-quarter profits rose to $7.2 million, or a nickel a share, up from $1.1 million, or a penny a share. Revenue fell to 8% to $4.3 billion.

Mr. Burke said Aecom's $6.3 billion in contract wins for the quarter, including work on the new stadium for the Los Angeles Rams football team, were a record.

The company's results in its year ended in September were hurt by "uneven client spending" in Aecom's Americas business, Mr. Burke said, as well as pressures from low oil and gasoline prices. Mr. Burke also blamed underwhelming performance on less-than-expected earnings contributions from sizable power and industrial construction wins in the second half of the year, because of timing.

Write to Doug Cameron at doug.cameron@wsj.com and Joshua Jamerson at joshua.jamerson@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
AECOM -3.66% 46.11 Delayed Quote.6.91%
LME NICKEL CASH -0.12% 12685 End-of-day quote.-9.88%
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Financials (USD)
Sales 2020 13 489 M
EBIT 2020 625 M
Net income 2020 190 M
Debt 2020 80,4 M
Yield 2020 -
P/E ratio 2020 37,2x
P/E ratio 2021 16,1x
EV / Sales2020 0,55x
EV / Sales2021 0,53x
Capitalization 7 314 M
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Mean consensus OUTPERFORM
Number of Analysts 11
Average target price 51,78  $
Last Close Price 46,11  $
Spread / Highest target 23,6%
Spread / Average Target 12,3%
Spread / Lowest Target -13,3%
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Managers
NameTitle
Michael S. Burke Chairman & Chief Executive Officer
Randall A. Wotring Chief Operating Officer
W. Troy Rudd Chief Financial Officer & Executive Vice President
Daniel R. Tishman Vice Chairman
Robert John Routs Independent Director
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