AECOM (ACM), Skanska to Design WSDOT's Improvement Project
AECOM ACM has been selected as the lead designer for the Washington State Department of Transportation’s (WSDOT) I-405, Brickyard to SR 527 Improvement Project, in partnership with Skanska.
The primary purpose of this project is to expand and renovate the 4.5 miles of the I-405 corridor in Bothell, WA. This includes the expansion of the dual express toll lane system from south of the I-405/SR 522 interchange to the I-405/SR 527 interchange. This upgradation will benefit the communities throughout the entire I-405 corridor with improved traffic conditions, direct access to state highways and other related conveniences.
Furthermore, the project also comprises additional improvements namely new lanes, direct access ramps, interchange improvements, infrastructure in support of Sound Transit’s Stride Bus Rapid Transit program, and new fish passage culverts within the project vicinity. This $834 million project is expected to begin in November 2023 and will open for public use in late 2028.
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Shares of AECOM declined 1.4% on Sep 6 during the trading session. The stock has gained 3.4% in the past three months compared with the Zacks Engineering - R and D Services industry’s 7.8% growth. Although shares of the company have underperformed its industry, its ongoing contract wins position it well to gain momentum in the upcoming period.
Global Infrastructure Spending Drives AECOM’s Growth
AECOM is expecting its solid pipeline of opportunities to be up in the double digits in the Americas design business. This is backed by its clients' strengthening funding backdrop, including benefits from the $1.2 trillion infrastructure bill and the Jobs Act in the United States, which ensure the continued growth of the company’s backlog. This highlights the increased demand for AECOM’s technical, advisory and program management capabilities. Also, the rising demand for ESG-related services underpins the company’s expectation for accelerating revenue growth in fiscal 2023 and continued margin, adjusted EBITDA and adjusted earnings per share (EPS) growth.
AECOM is also witnessing growth in its international infrastructure spending, owing to the improvement in the global economic scenario. It has been benefiting from solid infrastructure spending in the United Kingdom, Ireland, Australia, New Zealand, Hong Kong and the Middle East. Management remains confident to attain its goal of double-digit International margins by 2024.
At the end of third-quarter fiscal 2023, AECOM’s total backlog increased to $41.63 billion (including 10% growth in the design business) from $41.13 billion in the prior-year quarter.
Zacks Rank
AECOM currently carries a Zacks Rank #3 (Hold).
Key Picks
Some better-ranked stocks from the Construction sector are EMCOR Group, Inc. EME, TopBuild Corp. BLD and Fluor Corporation FLR.
EMCOR currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
EME delivered a trailing four-quarter earnings surprise of 17.2%, on average. Shares of the company have risen 85.2% in the past year. The Zacks Consensus Estimate for EME’s 2023 sales and EPS indicates growth of 11.5% and 35.9%, respectively, from the previous year’s reported levels.
TopBuild currently sports a Zacks Rank of 1. BLD delivered a trailing four-quarter earnings surprise of 14.1%, on average. Shares of the company have risen 55.4% in the past year.
The Zacks Consensus Estimate for BLD’s 2023 sales and EPS indicates growth of 3.3% and 6.1%, respectively, from the previous year’s reported levels.
Fluor currently sports a Zacks Rank of 1. FLR delivered a trailing four-quarter negative earnings surprise of 5.3%, on average. Shares of the company have gained 35.1% in the past year.
The Zacks Consensus Estimate for FLR’s 2023 sales and EPS indicates growth of 11.3% and 141.5%, respectively, from the previous year’s reported levels.
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