AECOM ACM will provide program management services to Peel Region for the Queen Street Housing Enabling Infrastructure Program (HEIP).

The Queen Street HEIP focuses on building essential water and wastewater infrastructure to support housing development in line with Ontario's goal of constructing 1.5 million homes by 2031, as mandated by Bill 23.

ACM will plan, design and implement new water and wastewater systems to provide residents with safe and reliable drinking water and wastewater services. With its deep understanding of Peel Region's infrastructure needs and a team of local water experts, AECOM is well-positioned to deliver long-term, sustainable improvements.

AECOM has completed several major projects in the Peel Region, including the recent expansion of the Clarkson Water Resource Recovery Facility.

ACM’s Stock Performance

The company’s shares have gained 11% so far this year, which underperforms the Zacks Engineering - R and D Services industry’s 38% growth.

Image Source: Zacks Investment Research

This global leader in water infrastructure has been ailing from labor shortages, particularly in skilled trades. Inflationary pressures, particularly in raw materials and energy, could also be bothering margins. This apart, broader economic uncertainties, such as fears of a recession or global economic slowdown, are likely to have been impacting the infrastructure sector. Investors should be cautious about long-term infrastructure spending, especially if government funding slows down.

ACM's Strong Backlog & Global Demand Drive Hope

Mitigating the above-mentioned headwinds, AECOM has been experiencing robust growth across its segments, backed by strong pipeline visibility for the upcoming quarters. Healthy state and local budgets, along with increased private sector investments in water and energy transitions, have contributed to this upward trend.

Global demand for infrastructure development is rising, further increasing the need for AECOM’s services. As of the fiscal third-quarter end, the total backlog was $23.36 billion compared with $23.21 billion in the prior-year period. The current backlog level includes 54.8% contracted backlog growth.

Ongoing contract wins are expected to boost prospects. Global infrastructure spending trends remain strong, providing further opportunities for AECOM’s continued expansion.

Key Picks

Some better-ranked stocks in the same space are:

Sterling Infrastructure, Inc. STRL presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Sterling Infrastructure has a trailing four-quarter earnings surprise of 17.4%, on average.  The Zacks Consensus Estimate for STRL’s 2024 sales and earnings per share (EPS) indicates a rise of 9.7% and 26.6%, respectively, from the prior-year levels.

Howmet Aerospace Inc. HWM presently carries a Zacks Rank #2 (Buy). HWM has a trailing four-quarter earnings surprise of 10.9%, on average.

The Zacks Consensus Estimate for HWM’s 2024 sales and EPS indicates a rise of 12.6% and 40.8%, respectively, from the prior-year levels.

M-tron Industries, Inc. MPTI currently carries a Zacks Rank of 2. It has topped earnings estimates in three of the trailing four quarters and missed once, with an average surprise of 9.2%.

The Zacks Consensus Estimate for MPTI’s 2024 sales and EPS indicates a rise of 16.1% and 76.6%, respectively, from prior-year levels.