AECOM’s Major Project Win
AECOM (ACM) has clinched a pivotal role in supporting the development of the $1.5 billion Susquehanna River Rail Bridge (SRB) Project in a notable collaboration with Amtrak.
The SRB Project, set to revamp rail connectivity and safety along the U.S. Northeast Corridor, involves replacing a 117-year-old two-track bridge in Maryland with two modern bridges designed to enhance capacity and reliability for freight and passenger trains.
The complexity of the SRB Project necessitates a top-notch team blending global expertise with local know-how, uniting varied disciplines and resources.
Under the agreement, AECOM will deliver an array of professional services including project management, design coordination, stakeholder coordination, and schedule management. AECOM will spearhead a skilled technical team comprising of subconsultants, including Disadvantaged Business Enterprise firms, to extend opportunities for those facing social and economic disadvantages to actively participate and reap rewards from the project’s economic expansion.
In light of these developments, AECOM remains sanguine about its commitment to assist Amtrak in delivering cutting-edge infrastructure on time that promises to revolutionize transportation in the region.
AECOM has been riding the wave of fruitful organic growth initiatives. In the first quarter of fiscal 2024, the company recorded revenues of $3.9 billion, marking a robust 15% year-over-year surge. Adjusted net service revenues (NSR) saw a 7% uptick at $1.71 billion. The design business posted an impressive 8% year-over-year organic NSR growth, particularly led by gains in water and transportation markets along with a 9% rise in the Americas region.
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Over the past six months, shares of AECOM have seen a 4.3% upswing, although lagging behind the 15% growth in the Zacks Engineering – R and D Services industry. Despite the underperformance vis-a-vis its industry peers, AECOM’s robust backlog levels indicate promising growth prospects. By the close of the first quarter of the fiscal year, the total backlog stood at a healthy $39.81 billion, with contracted backlog growth accounting for 56.5%.
The design business backlog witnessed a remarkable constant-currency growth of 9% during the first quarter, propelled by a nearly record-high win rate and positive end-market trends. The contracted design business backlog saw a solid 17% upsurge, supported by strong funding across key markets.
AECOM enjoys a positive outlook with a clear view of strong backlog and pipelines for forthcoming quarters. The company’s robust backlog levels, seen as essential predictors of future revenue growth, hint at significant opportunities in the upcoming months.
Investment Recommendations
Currently holding a Zacks Rank of #3 (Hold), AECOM remains a stock to watch in the Engineering and Infrastructure sector. For investors seeking better options in this field, the following companies present intriguing opportunities:
Advanced Drainage Systems, Inc. (WMS) flaunts a Zacks Rank of #1 (Strong Buy) and has delivered a remarkable trailing four-quarter earnings surprise averaging 37.1%. WMS shares have soared by 28.5% in the last six months.
Masco Corporation (MAS) holds a Zacks Rank of #2 (Buy) with its EPS for 2024 on an upward trajectory, increasing from $3.98 to $4.12 in the past 30 days. MAS, a prominent manufacturer of home improvement and building products, has seen its shares surge by 35% over the past six months.
Armstrong World Industries, Inc. (AWI) is another notable player carrying a Zacks Rank of #2. AWI has recorded an average trailing four-quarter earnings surprise of 13.1% and witnessed an impressive 67% surge in its shares over the last six months. Projections for AWI’s EPS for 2024 have risen from $5.52 to $5.65 in the past 30 days.
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