AECOM Technology Corporation (ACM): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
AECOM is a provider of professional, technical and management support services. We are reiterating our Neutral recommendation with a target price of $34. The company reported soft fourth-quarter and fiscal 2014 results with earnings lagging the Zacks Consensus Estimate. However, the top line improved driven by the strength in Professional Technical Services business. The company's backlog levels remain strong, with the Management Support Services business starting to benefit from the restructuring initiatives. The recent acquisition of URS Corp is also likely to be accretive for the company. However, this acquisition is expected to substantially drive the company's debt levels, which can weigh on its financials in the short term.

Overview:

AECOM Technology Corporation (ACM) is a leading solutions provider for supporting professional, technical and management solutions for diverse industries across end markets like transportation, facilities, government as well as those in environmental, energy and water businesses. AECOM specializes in providing integrated services for planning, construction and maintenance of infrastructures that includes consulting, architecture, engineering as well as managing the requirements for energy, water and environment.

The company's core area of expertise comprises planning and installing critical infrastructure systems by providing high quality commercial services aimed at extending the life of new and existing structures. The company's underlying motto is Create. Enhance. Sustain.'. The operations and maintenance services for these facility environment systems are also provided by the company. AECOM serves both private and institutional clients along with government entities.

In Oct 2014, AECOM closed the acquisition of San Francisco-based URS Corp. for about $4 billion. The deal's total enterprise value was around $6 billion. This acquisition has made AECOM one of the largest companies, in terms of revenues, in the engineering and construction industry. Post integration, the company intends to accelerate its strategy of offering an integrated-delivery model, by adding key capabilities and expertise in vital markets. Going forward, URS knowledge in sectors like construction, oil & gas, power and government services will likely be a significant growth driver for AECOM.


AECOM's businesses have been classified into two distinct segments: Professional Technical Services (PTS) and Management Support Services (MSS).

Professional Technical Services (PTS): (contributed 92.2% of the total revenue in fiscal 2014) The company's PTS segment provides planning, consulting, architecture and engineering design, along with services for managing program and construction for various institutional, commercial and public sector clients across the globe.

Management Support Services (MSS): (7.8%) The MSS segment specializes in maintenance services that include management of program and facilities as well as training and logistics services. It also excels in providing other core services including consulting and technical assistance, along with services for integrating the systems. The segment primarily provides services to various federal agencies.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: ACM

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As of 12/19/2014, 04:15 PM


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