Shares of AECOM (ACM) have been strong performers lately, with the stock up 16.3% over the past month. The stock hit a new 52-week high of $42.87 in the previous session. AECOM has gained 59.3% since the start of the year compared to the 37.6% move for the Zacks Construction sector and the 30.1% return for the Zacks Engineering - R and D Services industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on August 6, 2019, Aecom reported EPS of $0.72 versus consensus estimate of $0.71.
For the current fiscal year, Aecom is expected to post earnings of $3.32 per share on $20.39 billion in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $3.8 per share on $21.07 billion in revenues. This represents a year-over-year change of 19.88% and 3.37%, respectively.
Aecom may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Aecom has a Value Score of B. The stock's Growth and Momentum Scores are C and B, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 12.7X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 9.7X versus its peer group's average of 10.2X. Additionally, the stock has a PEG ratio of 1.36. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Aecom currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Aecom meets the list of requirements. Thus, it seems as though Aecom shares could have a bit more room to run in the near term.
How Does Aecom Stack Up to the Competition?
Shares of Aecom have been moving higher, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also looking good, including ROTORK (RTOXY), Meritage (MTH), and NVR (NVR), all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 26% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Aecom, even beyond its own solid fundamental situation.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
AECOM (ACM) : Free Stock Analysis Report
NVR, Inc. (NVR) : Free Stock Analysis Report
Meritage Corporation (MTH) : Free Stock Analysis Report
ROTORK PLC (RTOXY) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research