ACM changes
Pick any two versions below to diff them.
- Price
- $58.93 → $63.34(+7.5%)
- Discount category
- Deep below intrinsic value → Far below intrinsic value
- Next earnings
- Nov 10, 2026 → Nov 16, 2026
- Next earnings is estimate
- Yes → No
- Thesis
- The market prices AECOM for losses on one old Construction Management project and for slower growth. In Q3 fiscal 2026, AECOM took a $337 million pre-tax charge because the project needs more time and money to finish. The project was bid in 2019 under terms that AECOM says its current risk rules would not accept. AECOM cut its fiscal 2026 free cash flow guidance to about $300 million, and it lowered its net service revenue guidance because of delayed project starts and the conflict in the Middle East. Net debt rose to $1.73 billion at June 30, 2026, from $754 million a year earlier, after share buybacks and the lower cash flow. For the gap to close, three things must be true. The project must reach substantial completion in Q2 fiscal 2027, as AECOM expects, with no further large charge. The design business must keep its growth, so that the record backlog of $27.8 billion turns into net service revenue and the margin moves toward the 20% exit rate target for fiscal 2028. Free cash flow must return toward the target of more than 100% of adjusted net income. The fiscal 2026 report, removed: estimated for about added: on November removed: 10, added: 16, 2026, gives the first test and the guidance for fiscal 2027. The Q2 fiscal 2027 report in May 2027 shows whether the project is complete. If these checks pass, the gap can close over the next four to six quarters. The main reason it may not close is a new charge on Construction Management work, because the claims on this project can take several years to resolve.
- Checkpoints
- Nov removed: 10, 2026 (estimate): added: 16, 2026: Fiscal 2026 results: cash flow and fiscal 2027 guidance. Pending. Watch: Fiscal 2026 free cash flow of about $300 million or more, no new large project charge and fiscal 2027 guidance for adjusted EPS growth pass; a new charge or lower guidance fails. May 2027 (estimate): Q2 fiscal 2027 results: project completion. Pending. Watch: Substantial completion of the Construction Management project in Q2 fiscal 2027 without a further charge passes; a new delay or charge fails.