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AECOM-Fluor-Atkins JV Inks Hanford Cleanup Support Contract

Zacks Equity Research

AECOM ACM-led joint venture with Fluor FLR and Atkins — Central Plateau Cleanup Company LLC — has received a contact from the U.S. Department of Energy (“DOE”) to lead the Central Plateau Cleanup Contract at the DOE’s Hanford site near Richland, WA.

This indefinite-delivery/indefinite-quantity contract, which is valued at $10 billion over a 10-year ordering period, enables the joint venture to perform cleanup work at the Hanford site in Washington. This contract includes a 60-day transition period.

Central Plateau Cleanup Company will remediate waste sites; deactivate, decommission, decontaminate and demolish facilities; manage waste retrieval, storage, disposal and treatment; and oversee site safe and compliance base operations for DOE Richland operations office cleanup facilities.

The Central Plateau Cleanup Company brings the expertise of three leading nuclear industry companies together, thereby making it the single largest and experienced nuclear End State delivery team assembled in the U.S. Department of Energy complex. This joint venture has more than 100 years of combined nuclear experience that includes 63 years at Hanford. These companies have collectively decommissioned 1,179 facilities and dispositioned more waste than any other American company.

AECOM has been benefiting from strong backlog, and encouraging infrastructure spending by the federal government and cost-reduction efforts. Also, solid prospects across the business and strong brand presence are aiding the company.

Notably, shares of AECOM have surged 62.5% so far this year compared with the industry’s 26.2% rally. The price performance was backed by a solid earnings surprise history. The company’s earnings surpassed the Zacks Consensus Estimate in eight of the trailing nine quarters.

Meanwhile, AECOM — which already completed nearly 50% of its country exit plan as of Sep 30, 2019 — intends to exit more than 30 countries in order to prioritize investments in markets with higher prospects and competitive advantages.

To this end, in October, AECOM entered into a definitive agreement for the sale of the Management Services business to affiliates of American Securities LLC and Lindsay Goldberg. The deal is expected to close in first-half fiscal 2020.

Post the completion of this divestiture, the professional services business is expected to be a lower risk, higher-returning firm focused on industry-leading design, planning, architecture, engineering, program management and construction management capabilities. Notably, the Professional Services business of this Zacks Rank #2 (Buy) company includes Design and Consulting Services, Construction Management and AECOM Capital businesses, and excludes the Management Services business.

Other Stocks to Consider

Other top-ranked stocks in the same space include Gates Industrial Corporation plc GTES and Quanta Services, Inc PWR, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Gates Industrial’s earnings surpassed estimates in two of the trailing four quarters, with the average positive surprise being 12.1%.

Quanta Services’ 2020 earnings are expected to rise 21.5%.

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