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Aecom (ACM) posted revenue of $3.83 billion for its fiscal first quarter, exceeding the consensus estimate of $3.53 billion. Adjusted earnings came in at $1.29 a share, above expectations for $1.16 a share.

Net income fell to $140 million, or $1.06 a share, from $177 million, or $1.33 a share, a year earlier.

Operating income declined 7% to $222 million, while revenue fell 5% year over year, largely reflecting lower pass-through revenue. Net service revenue increased 5% on an adjusted basis, supported by growth in the Americas segment.

Margins improve as backlog expands

Adjusted operating margin rose to 16.4%, an increase of 100 basis points from the prior year. Earnings before interest, taxes, depreciation and amortization rose 6% to $287 million, with margin expansion driven by productivity gains and higher-value work.

Aecom (ACM) reported total backlog of $26.0 billion, up 9% from a year earlier and a record for the company. The quarter produced a book-to-burn ratio of 1.5x, marking the 21st consecutive quarter above 1.0.

“We outperformed our expectations on every key financial metric in the quarter and raised our full year guidance as a result,” said Chairman and Chief Executive Troy Rudd in a statement.

Construction management business retained

Aecom (ACM) said it completed its review of strategic alternatives for its Construction Management business and decided to retain and operate the unit. Results continue to reflect the segment as a continuing operation.

The company returned more than $340 million to shareholders through share repurchases and dividends during the quarter. After the quarter ended, the board approved an increase to the company’s share repurchase authorization to $1 billion.

Guidance raised for fiscal 2026

Aecom (ACM) raised its fiscal 2026 outlook, citing strong execution in its design business, a lower expected tax rate and improved visibility from its growing backlog.

The company now expects adjusted earnings of $5.85 to $6.05 a share, up from a prior range of $5.65 to $5.85. It also forecasts earnings before interest, taxes, depreciation and amortization of $1.27 billion to $1.31 billion, compared with its prior outlook of $1.27 billion to $1.31 billion.

Free cash flow is expected to be about $400 million for the year, with organic net service revenue growth projected at 6% to 8%.

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But despite the rebound and growing economic optimism among investors, Goldman says markets are still not fully pricing in a stronger growth outlook for 2026.

Goldman’s internal equity rotations and cross-asset signals suggest markets are effectively pricing about 2.0% real GDP growth next year, in line with consensus forecasts but below Goldman’s 2.5% estimate. Within cyclicals, consumer stocks and companies tied to nonresidential construction stand out as laggards relative to what would typically be expected if investors were fully discounting faster growth.

Goldman highlights a screen of stocks with exposure to nonresidential construction, noting that Ground Transportation and Building Products account for more than half of the group — sectors that could see catch-up performance if the market begins to price a stronger economic acceleration.

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CSX Corporation (CSX) — YTD total return 17%
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Union Pacific Corporation (UNP) — YTD total return 6%
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Saia, Inc. (SAIA) — YTD total return -25%

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The Bastrop, Texas-based company specializes in constructing fast, low-cost underground tunnels for transportation using electric vehicles in its “Loop” systems. The company’s flagship operational project is the Las Vegas Convention Center Loop, which is a 1.7-mile network with stations at the convention center, Resorts World, Westgate, and Encore. Expansions are accelerating, including the University Center Loop to Virgin Hotels and Howard Hughes Center, with fire safety approvals enabling further links to Wynn, Caesars Palace, the Strat, and Fremont Street as part of a grand 68-mile, 104-station Vegas Loop vision.

Another major focus of Boring is the Harry Reid International Airport extension, a 0.5-mile tunnel from Paradise Road to a new station near airport parking set to open by the first quarter of 2026. The airport extension is expected to be able to handle 20,000 passengers per hour at 35 mph at fares more than 50% below rideshare prices.

The Boring Company also has a project in Nashville, with the Music City Loop advancing toward tunneling in January 2026. The aim is to connect downtown to the airport by fall 2026, potentially expanding statewide to Knoxville. There has also been speculation about Boring projects in Houston and Los Angeles. Internationally, Boring has plans to build a loop in Dubai.

A 2022 Series C funding round valued Boring at $5.7 billion.

Caterpillar (CAT), AECOM (ACM), and Jacobs Engineering Group (J) are three companies that are very loosely related to Boring’s unique main business. Elon Musk’s other companies include Tesla (TSLA), SpaceX (SPACE), Neuralink, and xAI (XAI).

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The company also raised expected adjusted EPS CAGR from fiscal 2026-2029 to 15%+.

Furthermore, it initiated a review of strategic alternatives for the construction management business, including a possible sale, reflecting a commitment to allocate time and capital to its fastest-growing and highest-returning opportunities.

Beginning with first-quarter results, the construction management business is expected to be classified as held for sale on the balance sheet and reported in discontinued operations under GAAP.

AECOM (ACM) down 4.5% premarket.

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The consensus EPS Estimate is $1.34 (+15.5% Y/Y) and the consensus Revenue Estimate is $4.31B (+3.9% Y/Y).Over the last 2 years, ACM has beaten EPS estimates 88% of the time and has beaten revenue estimates 50% of the time.Over the last 3 months, EPS estimates have seen 1 upward revision and 3 downward.

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