On Jan 7, Zacks Investment Research downgraded
AECOM Technology Corporation
) to a Zacks Rank #5 (Strong Sell).
Why the Downgrade?
AECOM has witnessed sharp downward estimate revisions after
reporting lesser-than-expected fourth-quarter 2013 results.
Moreover, weak cash and balance sheet position does not
facilitate enough flexibility to make innovative investments and
make strategic acquisitions.
On Nov 13, AECOM reported fourth quarter net income of $76.6
million or 77 cents per share, falling short of the Zacks
Consensus Estimate of 79 cents per share.The company reported
total revenue of $2,079.1 million, marginally down 0.2% year over
year. The revenues were primarily impacted by the dismal
performance of the Management Support Services segment in the
The company is experiencing slower-than-expected growth on
both the top and bottom lines. Furthermore, a sluggish federal
demand remains a challenge for AECOM going forward.
Moreover, declining demand from Australia was a drag for the
company's revenues in 2013, and the situation is likely to
continue in 2014. This business has been sluggish primarily due
to the weakness in the mining sector. Also, the projects included
in the company's backlog are usually long-cycle projects, which
run the risks of getting delayed or cancelled; thereby impacting
AECOM's operations and cash flows.
AECOM has also been planning to reposition its MSS (Management
Support Services) business to make it more profitable. The
company plans to shift from higher-volume lower-margin
international work to lower-volume higher-margin work in the U.S.
The resultant decrease in volume is likely to impact the
company's revenues and earnings until the desired margin levels
The Zacks Consensus Estimate for first-quarter 2014 decreased
8.5% to 54 cents per share over the last 60 days. For fiscal
2014, all of the 10 estimates were revised downward over the last
60 days, dragging the Zacks Consensus Estimate by 9.6% to $2.45
Other Stocks to Consider
Other stocks worth considering include
Pioneer Power Solutions, Inc.
) with a Zacks Rank #1 (Strong Buy), and
Foster Wheeler AG
Altra Industrial Motion Corp.
), both carrying a Zacks Rank #2 (Buy).
AECOM TECH CORP (ACM): Free Stock Analysis
ALTRA HOLDINGS (AIMC): Free Stock Analysis
FOSTER WHELR AG (FWLT): Free Stock Analysis
PIONEER PWR SOL (PPSI): Get Free Report
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