AECOM (ACM) Unit Receives $24 Million U.S. Defense Contract

AECOM’s ACM unit, Aecom Technical Services Inc. recently received a $24-million contract from the U.S. Department of Defense. The contact was awarded by the U.S. Army Corps of Engineers, San Francisco, CA.

Per the deal, Aecom Technical Services will provide architecture and engineering services to the U.S. Army and is estimated to be completed by Aug 29, 2023.

Steady Contract Wins to Boost Revenues

AECOM is witnessing robust prospects in all its segments, namely Design and Consulting Services, Construction Services and Management Services. All the three segments of the company recorded growth through the nine months of fiscal 2018, further adding to its growth potential.

At the end of fiscal third quarter, the company recorded a backlog of $54 billion, reflecting a 16% year-over-year increase. The company’s solid backlog levels, which are a key indicator of future revenue growth, indicate significant opportunities in the forthcoming quarters. During fiscal third quarter, it secured wins worth $9.4 billion and recorded a book-to-burn ratio of 1.7%, with significant contribution from all the three segments.

However, shares of AECOM have underperformed the industry in the past three months. Its shares have increased 0.3% compared with the industry’s rally of 11.4% in the said period.

That said, Trump administration's focus on investing in defense and cyber security is expected to prove conducive to the company’s growth. More than 70% of AECOM’s profits are generated from infrastructure and defense markets that are poised to benefit from the favorable political climate in the United States, and abroad.

Zacks Rank & Stocks to Consider

Currently, AECOM carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include KBR, Inc. KBR, Gates Industrial Corporation plc GTES and Jacobs Engineering Group Inc. JEC, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

KBR’s earnings surpassed the consensus estimate in three of the trailing four quarters, with an average positive surprise of 12.3%.

Gates Industrial’s 2018 earnings are expected to increase 42.2%.

Jacobs’ fiscal 2018 earnings estimates are expected to rise 35.2%.

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