AECOM
ACM
$69.17
+4.42%
AECOM is a global infrastructure consulting firm providing advisory, design, and engineering services across water, transportation, environment, and other end markets. As one of the largest players in the engineering and construction industry, AECOM employs 51,000 people and generated $16.1 billion in sales in fiscal 2025, positioning it as a market leader with a broad geographic and sector footprint. The current investor narrative centers on a recent earnings miss driven by a one-time project charge that sent the stock to a 52-week low, despite record backlog and strong revenue growth. The debate revolves around whether this is a temporary setback or a sign of execution risk, with the market punishing the stock's high valuation and leaving little room for error.…
ACM
AECOM
$69.17
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Investment Opinion: Should I buy ACM Today?
Based on the analysis, AECOM is rated a Buy, with a thesis that the recent earnings miss is a one-time event and the record backlog will drive future growth. The analyst consensus is Strong Buy with an average target price of $86.92, implying a 34.2% upside. The forward PE of 10.1x and PEG of 0.72 suggest the stock is undervalued, and the high ROE of 22.5% indicates efficient capital use.
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ACM 12-Month Price Forecast
The AI assessment is bullish on AECOM, with medium confidence, based on the attractive forward valuation and strong analyst support. The record backlog and high ROE suggest the company has a solid foundation, but the stagnant revenue growth and high leverage are concerns. The stance would be upgraded to high confidence if revenue growth accelerates above 5% and the company demonstrates consistent backlog conversion. It would be downgraded to neutral if the company reports another major charge or if revenue growth turns negative.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on AECOM's 12-month outlook, with a consensus price target around $86.92 and implied upside of +25.7% versus the current price.
Average Target
$86.92
0 analysts
Implied Upside
+25.7%
vs. current price
Analyst Count
—
covering this stock
Price Range
$65 - $106
Analyst target range
AECOM is covered by 12 analysts, with a consensus recommendation of 'Strong Buy' and a mean recommendation score of 1.46 (where 1 is Strong Buy and 5 is Sell). The average target price is $86.92, implying a 34.2% upside from the current price of $64.79. The distribution is bullish, with no Sell ratings and only a few Hold/Equal Weight ratings, as seen in the institutional ratings from firms like Truist (Buy), RBC (Outperform), and Citigroup (Buy). The target price range spans from a low of $65.00 to a high of $106.00, with the low target near the current price, suggesting some analysts see limited downside. The high target of $106 implies a 63.6% upside, likely assuming a successful resolution of the project issues and continued backlog conversion. The wide spread between low and high targets (63% difference) indicates high uncertainty, but the overall bullish sentiment and recent reaffirmations of Buy ratings suggest analysts view the recent drop as an overreaction to a one-time event.
Bulls vs Bears: ACM Investment Factors
The bull case for AECOM rests on a record backlog, attractive forward valuation, and strong analyst support, suggesting the recent drop is an overreaction to a one-time event. The bear case highlights stagnant revenue growth, high leverage, and thin margins, which could signal deeper operational issues. Currently, the evidence slightly favors the bulls, as the forward PE of 10.1x and PEG of 0.72 imply the market is pricing in a recovery that analysts expect. The key tension is whether the one-time project charge is truly isolated or indicative of broader execution risk. If the company can convert its record backlog into revenue and maintain margins, the stock has significant upside; if not, the high debt and low margins could lead to further downside.
Bullish
- Record backlog signals future revenue: Despite the recent earnings miss, AECOM's backlog is at record levels, indicating strong demand for its infrastructure services. This suggests that the one-time project charge is an isolated event and the core business remains robust, with revenue expected to convert from backlog over time.
- Forward PE of 10.1x is attractive: The forward PE of 10.09x is significantly lower than the trailing PE of 30.77x, implying the market expects a sharp earnings recovery. This valuation is below the sector average, suggesting the stock is undervalued on forward earnings, especially if the company can normalize earnings post-charge.
- Strong analyst consensus with 34% upside: Analysts rate AECOM a Strong Buy with an average target price of $86.92, implying a 34.2% upside from the current price of $64.79. The low target of $65.00 is near the current price, indicating limited downside risk, while the high target of $106.00 suggests significant potential if execution improves.
- High ROE of 22.5% reflects efficiency: AECOM's return on equity is 22.5%, well above the industry average, indicating efficient use of shareholder capital. This is partly due to leverage (debt-to-equity of 1.35), but it also demonstrates the company's ability to generate profits from its asset base.
Bearish
- Revenue growth stagnating at 0.78%: The latest quarter's revenue growth was a mere 0.78% year-over-year, despite record backlog. This suggests that the company is struggling to convert its backlog into revenue, which could indicate operational inefficiencies or project delays, undermining the growth narrative.
- High leverage with debt-to-equity of 1.35: AECOM's debt-to-equity ratio of 1.35 indicates significant leverage, which increases financial risk. Interest expense of $50.6 million in the latest quarter eats into profits, and if interest rates remain high, this could pressure margins further.
- Negative free cash flow in latest quarter: The company reported negative free cash flow of -$27.4 million in the latest quarter, a concerning sign for a capital-intensive business. This was driven by a one-time charge, but it highlights potential cash flow volatility and the need for careful cash management.
- Stock down 46.7% in one year: AECOM's stock has fallen 46.71% over the past year, significantly underperforming the S&P 500, which rose 20.48%. This reflects investor concerns about execution and the high valuation, and the stock is now near its 52-week low, indicating persistent selling pressure.
ACM Technical Analysis
AECOM's stock is in a pronounced downtrend, with a 1-year price change of -46.71% and a 6-month change of -33.81%. The current price of $64.79 sits just 7.4% above the 52-week low of $60.35 and far below the 52-week high of $135.52, placing it at the bottom of its 52-week range. This positioning near the lows suggests a falling knife scenario, where value investors might see opportunity but momentum traders see continued weakness. The stock's beta of 0.92 indicates it is slightly less volatile than the market, but the relative strength versus the S&P 500 is deeply negative, with a 1-year relative strength of -67.19%, underscoring significant underperformance.
Beta
0.92
0.92x market volatility
Max Drawdown
-54.6%
Largest decline past year
52-Week Range
$60-$136
Price range past year
Annual Return
-45.0%
Cumulative gain past year
| Period | ACM Return | S&P 500 |
|---|---|---|
| 1m | -6.0% | +5.5% |
| 3m | -0.3% | +1.7% |
| 6m | -29.4% | +12.2% |
| 1y | -45.0% | +18.6% |
| ytd | -28.2% | +12.8% |
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ACM Fundamental Analysis
Revenue growth has been sluggish, with the most recent quarter (Q2 FY2026, ended March 31, 2026) showing revenue of $3.80 billion, up only 0.78% year-over-year. Over the past four quarters, revenue has ranged from $3.77 billion to $4.18 billion, indicating stagnation rather than acceleration. The Americas segment contributed $2.98 billion, while International added $0.85 billion, showing a heavy reliance on the domestic market. This flat growth trajectory is concerning for a company with a record backlog, suggesting that conversion to revenue is not accelerating. Profitability is modest, with a gross margin of 7.8% and an operating margin of 6.5% in the latest quarter, reflecting the low-margin nature of engineering services. Net income was $179.9 million, yielding a net margin of 4.7%, which is an improvement from the prior quarter's 1.9% but still thin. The company's ROE is strong at 22.5%, but this is partly due to high leverage, as the debt-to-equity ratio stands at 1.35. Free cash flow over the trailing twelve months was $410.2 million, but the latest quarter saw negative FCF of -$27.4 million, driven by a net loss in the cash flow statement due to a one-time charge. The current ratio of 1.14 indicates adequate liquidity, but the high debt load and interest expense of $50.6 million in the quarter warrant monitoring.
Quarterly Revenue
$3.8B
2026-03
Revenue YoY Growth
+0.8%
YoY Comparison
Gross Margin
7.8%
Latest Quarter
Free Cash Flow
$410247000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is ACM Overvalued?
Given that AECOM is profitable, the PE ratio is the primary valuation metric. The trailing PE is 30.77x, while the forward PE is 10.09x, a significant gap that implies the market expects a sharp earnings recovery, likely due to the one-time charge depressing trailing earnings. The PEG ratio of 0.72 suggests the stock is undervalued relative to its expected growth, but this is based on forward estimates that may be optimistic. Compared to the industry, AECOM's PS ratio of 1.07 is below the sector average, and its EV/Sales of 0.71 is also low, indicating a potential discount. However, the PB ratio of 6.93 is elevated, reflecting the high ROE. Historically, the stock's PE has ranged from 15x to 2443x over the past few years, with the current trailing PE near the higher end, but the forward PE is near the lower end, suggesting the market is pricing in a normalization of earnings. The stock's valuation appears to be at a discount on forward metrics, but the high trailing PE and the recent earnings miss create uncertainty.
PE
30.8x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 15x~66x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
14.9x
Enterprise Value Multiple
Investment Risk Disclosure
Financial risks are significant, with a debt-to-equity ratio of 1.35 and interest expense of $50.6 million in the latest quarter, which could strain cash flows if rates remain high. The negative free cash flow of -$27.4 million in the latest quarter, though driven by a one-time charge, highlights cash flow volatility. Revenue growth is sluggish at 0.78% YoY, and with gross margins of only 7.8%, any cost overrun can quickly impact profitability. The high leverage amplifies these risks, as the company must service debt even during downturns.