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AECOM's Thames Deal Fails to Cheer

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AECOM Technology Corporation’s (ACM) joint venture recently won a $285.8 million contract along with its joint venture partners Murphy and Kier to revamp Deephams Sewage Treatment Works in London. The deal was awarded by Thames Water, a private utility company responsible for the public water supply and waste water treatment in large parts of Greater London. However, the deal failed to cheer investors and share prices fell 3.3% till Thursday.

The scope of the contract entails the joint venture partners to undertake upgradation of the sewage work facility in accordance with the new environment agency sewage treatment standards. The work will be executed without compromising the day-to-day operations of the facility.

Deephams Sewage Treatment Works is a major sewage facility in London and is a critical component of the U.K.’s water industry. The upgradation is expected to increase the capacity of River Lee in order to meet the requirements of the growing population. It will also reduce the intensity of odor on the facility site.

AECOM and partners are expected to initiate the project as soon as possible, beginning with the drafting of planning application in summer 2014.  AECOM’s energy-neutral yet cost-effective solutions are positives for this challenging project.

Based in Los Angeles, AECOM provides professional, technical and management support services across the globe to a broad range of markets, including transportation, facilities, environmental and energy. The company supports governments of various countries to improve and expand their infrastructure.

AECOM currently carries a Zacks Rank #4 (Sell). Better-ranked stocks in the engineering and construction sector worth considering at the moment include VSE Corp. (VSEC), which carries a Zacks Rank #1 (Strong Buy), and Jiangsu Expressway Co. Ltd. (JEXYY) and Rexnord Corp. (RXN), both carrying a Zacks Rank #2 (Buy).

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