AECOM (ACM) to Report Q4 Earnings: What's in the Store?
AECOM ACM is scheduled to report fourth-quarter fiscal 2023 results on Nov 13, after market close.
In the last reported quarter, ACM’s earnings missed the Zacks Consensus Estimate by 1.1% but increased 10.6% year over year. Net sales beat the consensus mark by 4.9% and rose 13% year over year.
AECOM’s earnings topped the consensus mark in three of the last four quarters and missed once, the average surprise being 3.6%.
Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has been stable at $1.01 in the past 30 days. The estimated figure indicates a 13.5% increase from the year-ago quarter’s level.
AECOM Price and EPS Surprise
AECOM price-eps-surprise | AECOM Quote
The consensus mark for net sales is pegged at $3.58 billion, suggesting 4.6% growth from the year-ago reported figure of $3.43 billion.
Key Factors to Note
AECOM is expected to have reported solid revenues and earnings in the fiscal fourth quarter. The company has been gaining from strength in the design business thanks to impressive Americas and International markets.
Our expectation for Americas segment sales is pegged at $2,736.1 million, suggesting an increase of 4.5% from the $2,618.9 million reported in the year-ago period. The same for International segment sales is pegged at $848.7 million, up 5.2% from $806.8 million reported in the year-ago levels.
The company’s Think and Act Globally strategy, record design backlog and pipeline of opportunities continue to remain strong. The company’s net service revenues or NSR — defined as revenues excluding subcontractor and other direct costs — have been benefiting from strength across core transportation, water and environment markets.
We expect a total backlog of $42.29 billion, suggesting an increase from the year-ago level of $40.18 billion.
Our estimate for NSR is pegged at $1,704.7 million, suggesting a 7.3% increase from the year-ago level of $1,589.4 million.
Also, its focus on ESG or Environmental, Social and Governance bodes well. Demand for AECOM’s technical, advisory and program management capabilities is increasing on an improving funding environment as well as rising demand for ESG-related services.
AECOM has undertaken certain restructuring moves to improve profitability and de-risk the business profile. These moves are helping ACM reduce costs and simplify its operating structure. These strategic initiatives are likely to have added benefits for the company’s bottom line in the fiscal fourth quarter.
We project an adjusted EBITDA margin of 7.1%, an improvement of 10 basis points from a year ago period.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for AECOM this time around. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as elaborated below.
Earnings ESP: Otis has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Currently, AECOM carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank stocks here.
Peer Releases
KBR, Inc. KBR reported mixed third-quarter 2023 results, wherein earnings surpassed the Zacks Consensus Estimate, but revenues missed the same.
Earnings beat the consensus estimate for the eighth straight quarter. Revenues, on the other hand, surpassed the mark in three of the trailing eight quarters and missed on the remaining five occasions.
Quanta Services Inc. PWR reported better-than-expected results for third-quarter 2023, wherein adjusted earnings and revenues surpassed the Zacks Consensus Estimate. Both metrics were up on a year-over-year basis.
The company continues to experience high demand for its infrastructure solutions that support energy transition initiatives and increase reliability, safety and efficiency. Project activity associated with renewable generation has been going strong and is expected to continue throughout the year.
Fluor Corporation FLR reported stellar results for third-quarter 2023, wherein earnings and revenues surpassed the Zacks Consensus Estimate and increased from the previous year, given solid demand for its engineering and construction solutions.
Given the company’s positive advances on large Energy Solutions projects and continued progress on projects in our legacy portfolio, Fluor lifted its expectations for 2023.
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