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Aecon Group Inc. (TSE:ARE)
TSX:ARE
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Aecon Group Inc.
(TSX:ARE)
51Neutral
Positive Factors
Capital Allocation
The company increased its dividend and initiated a buyback following in-line Q4/24 results.
Financial Performance
The company's Q4/24 AFF exceeded street expectations, indicating strong performance.
Negative Factors
Future Outlook
There is higher cost guidance reflected in the updated model, impacting future outlook.
Aecon Group Inc. (ARE) vs. S&P 500 (SPY)
Market Cap
C$1.13B
Dividend Yield4.21%
Average Volume (3M)514.90K
Price to Earnings (P/E)―
Beta (1Y)0.90
Revenue Growth-8.64%
EPS Growth-136.62%
CountryCA
Employees8,684
SectorIndustrials
Sector Strength72
IndustryConstruction
Share Statistics
EPS (TTM)-0.96
Shares Outstanding62,834,007
10 Day Avg. Volume681,947
30 Day Avg. Volume514,898
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.27
Price to Cash Flow (P/CF)-8.90
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$27.00Price Target Upside49.58% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering9
Aecon Group Inc. Business Overview & Revenue Model
Company DescriptionAecon Group Inc. (ARE) is a leading Canadian construction and infrastructure development company, recognized for its comprehensive services in the construction sector. The company operates through three primary segments: Infrastructure, Industrial, and Concessions. Aecon's core products and services include the development and construction of infrastructure projects such as transportation networks, utilities, and energy facilities. It also engages in public-private partnerships and provides services related to project management, procurement, and engineering.
How the Company Makes MoneyAecon Group Inc. generates revenue primarily through its diverse construction and infrastructure development projects. The Infrastructure segment contributes significantly by undertaking large-scale public and private sector projects, including roads, bridges, and transit systems. The Industrial segment focuses on projects in the energy and resources sectors, offering services such as fabrication, modularization, and maintenance. Additionally, the Concessions segment involves investment and management of infrastructure projects through public-private partnerships, providing long-term revenue streams. Aecon's earnings are bolstered by strategic partnerships with government bodies and private entities, ensuring a steady pipeline of projects and contracts.
Aecon Group Inc. Financial Statement Overview
Summary
Aecon Group Inc. faces challenges with declining revenues and profitability pressures, leading to net losses in 2024. The balance sheet shows stable leverage with improved debt management, but negative ROE is a concern. Cash flow difficulties are evident, with negative free cash flow and issues in cash conversion efficiency. While liquidity remains strong, overall financial performance indicates areas requiring attention.Income Statement
The income statement shows declining revenues over the years, with a significant drop from 2023 to 2024. Gross profit margin has decreased from 8.65% in 2019 to 4.30% in 2024, indicating cost pressure or pricing challenges. Net loss in 2024 results in a negative net profit margin of -1.40%, down from a positive 3.49% in 2023. The EBIT margin turned negative in 2024, which is a concern for operational efficiency.45
Neutral
Balance Sheet
The balance sheet reflects a stable debt-to-equity ratio of 0.32 in 2024, improving from previous years, indicating better leverage management. However, the equity ratio has shown slight volatility, standing at 29.64% in 2024. Return on equity has turned negative in 2024, driven by net losses, which is concerning for shareholder returns.60
Neutral
Cash Flow
Cash flow analysis highlights a negative free cash flow in recent years, with a significant drop from a positive value in 2023 to negative in 2024. The operating cash flow to net income ratio is also concerning, indicating challenges in converting income to cash. Despite these issues, the company maintained a good liquidity position with cash exceeding debt.50
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 4.24B | 4.64B | 4.70B | 3.98B | 3.64B | Gross Profit |
| 182.55M | 255.63M | 355.96M | 366.82M | 401.25M | EBIT |
| -60.05M | 240.91M | 97.15M | 118.81M | 149.85M | EBITDA |
| 36.14M | 311.36M | 176.51M | 192.90M | 228.44M | Net Income Common Stockholders |
| -59.52M | 161.89M | 30.38M | 49.68M | 88.03M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 438.02M | 645.78M | 378.01M | 532.68M | 658.27M | Total Assets |
| 3.23B | 3.20B | 3.57B | 3.29B | 3.29B | Total Debt |
| 304.42M | 418.19M | 909.06M | 779.63M | 728.03M | Net Debt |
| -133.61M | -227.60M | 531.85M | 246.95M | 69.76M | Total Liabilities |
| 2.26B | 2.13B | 2.61B | 2.37B | 2.41B | Stockholders Equity |
| 956.12M | 1.06B | 954.00M | 913.57M | 874.11M |
| Cash Flow | Free Cash Flow | |||
| -45.67M | 27.07M | -154.17M | -73.03M | 133.68M | Operating Cash Flow |
| 7.60M | 51.07M | -112.86M | -31.41M | 272.96M | Investing Cash Flow |
| -159.61M | 360.78M | -35.90M | -39.63M | -189.36M | Financing Cash Flow |
| -58.26M | -141.91M | -11.86M | -52.28M | -107.26M |
Aecon Group Inc. Technical Analysis
Negative
18.05
Price Trends
23.90
Negative
25.30
Negative
21.35
Negative
Market Momentum
-1.53
Positive
17.32
Positive
8.73
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:ARE, the sentiment is Negative. The current price of 18.05 is below the 20-day moving average (MA) of 22.07, below the 50-day MA of 23.90, and below the 200-day MA of 21.35, indicating a bearish trend. The MACD of -1.53 indicates Positive momentum. The RSI at 17.32 is Positive, neither overbought nor oversold. The STOCH value of 8.73 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:ARE.
Aecon Group Inc. Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $13.28B | 38.14 | 12.88% | 0.73% | 15.75% | 7.64% | |
71 Outperform | $1.38B | 23.65 | 0.70% | 8.54% | -8.89% | -82.18% | |
71 Outperform | C$31.87B | 45.76 | 9.33% | 0.61% | 11.98% | 22.53% | |
68 Neutral | C$758.76M | 23.67 | 6.73% | ― | 4.84% | 67.68% | |
62 Neutral | $8.16B | 12.85 | 0.64% | 3.04% | 3.83% | -15.83% | |
51 Neutral | C$1.13B | ― | -5.87% | 4.21% | -8.64% | -136.62% |
* Industrials Sector Average
Performance Comparison
TSE:ARE
Aecon Group Inc.
18.05
2.54
16.38%
TSE:BIR
Birchcliff Energy
5.07
-0.05
-0.92%
TSE:STN
Stantec
116.38
2.37
2.08%
TSE:GDI
GDI Integrated
32.22
-6.08
-15.87%
TSE:WSP
WSP Global
241.24
17.38
7.76%
Aecon Group Inc. Earnings Call Summary
Earnings Call Date: Mar 5, 2025 | % Change Since: -18.95% | Next Earnings Date: Apr 23, 2025
Earnings Call Sentiment Neutral
The earnings call reflected both challenges and opportunities for Aecon. While the company faced significant declines in revenue, EBITDA, and construction segment performance, it also reported a strong backlog, strategic acquisitions, and growth in collaborative contracting and U.S. operations. The impact of legacy projects remains a concern, but the company's strategic initiatives and project transitions show potential for future growth.Highlights
Strong Backlog and New Contracts
Aecon reported a backlog of $6.7 billion at the end of 2024, up from $6.2 billion a year ago. New contract awards of $4.7 billion were booked in the year, surpassing the $4.5 billion in the previous year.
Strategic Acquisitions
The acquisition of United, Ainsworth Power Construction, and Xtreme Powerline has strengthened Aecon's position in the utilities, nuclear, and conventional power sectors across North America.
Transition to Collaborative Contracting Models
Aecon has successfully transitioned several major projects, like the Scarborough Subway Extension, to collaborative and progressive design-build models, which are expected to improve margin predictability.
Growth in Nuclear and Utilities
In 2024, 45% of Aecon's construction revenue was generated from the utilities and nuclear sectors, compared to 39% in 2023, indicating growth in these areas.
Expansion in the U.S. Market
Aecon's U.S. operations have grown significantly, with nuclear-related revenue expected to reach between CAD 150 million and CAD 200 million in 2025.
Lowlights
Overall Revenue and EBITDA Decline
Revenue for the year was $4.2 billion, 9% lower compared to 2023, and adjusted EBITDA decreased to $83 million from $143 million in the previous year.
Impact of Legacy Projects
Legacy project losses negatively impacted consolidated adjusted EBITDA by $273 million in 2024, compared to $215 million in 2023.
Decline in Construction Segment Performance
Construction revenue decreased by 8% from the previous year, with significant declines in industrial operations and urban transportation solutions.
Operating Loss
The company reported an operating loss of $60 million compared to an operating profit of $241 million in 2023.
Lower Earnings Per Share
Diluted loss per share was $0.95 compared to diluted earnings per share of $2.10 in 2023.
Company Guidance
During Aecon Group, Inc.'s Q4 2024 earnings call, several key financial metrics and future outlooks were discussed. The company's revenue for 2024 was reported at $4.2 billion, a 9% decrease from the previous year. Adjusted EBITDA dropped to $83 million from $143 million in 2023, negatively impacted by $273 million in legacy project losses. The operating loss stood at $60 million compared to an operating profit of $241 million in 2023. The backlog increased to $6.7 billion, up from $6.2 billion last year, with new contract awards totaling $4.7 billion for 2024. The Concessions segment's adjusted EBITDA was $87 million, slightly lower than the prior year's $90 million. Looking forward, Aecon anticipates revenue growth in 2025 driven by a strong backlog, recent contract awards, and a robust bid pipeline, though margins are expected to face headwinds from ongoing completion of major projects.Aecon Group Inc. Corporate Events
Delistings and Listing ChangesM&A TransactionsBusiness Operations and StrategyFinancial Disclosures
Aecon Group Inc. Reports 2024 Financial Results and Strategic Developments
Neutral
Mar 5, 2025
Aecon Group Inc. reported a year-end revenue of $4.2 billion for 2024, with a backlog of $6.7 billion, despite a decrease in revenue and operating profit compared to 2023. The company anticipates stronger revenue in 2025, driven by a robust backlog, new contract awards, and strategic acquisitions. Aecon is advancing several major long-term projects and has been added to the S&P/TSX Composite Index, highlighting its significant market presence. Recent acquisitions and new contracts, including a major nuclear project and a subway extension, are expected to bolster its operations and industry positioning.
Business Operations and Strategy
Aecon Secures $2.8 Billion Transit Project Contract
Positive
Jan 28, 2025
Aecon Group Inc. announced that its consortium has reached a commercial close on a target price transit project, marking the completion of the collaborative development phase. This contract, valued at over $2.8 billion, will significantly boost Aecon’s Construction segment backlog in early 2025, enhancing its market position in the urban transportation sector.
Business Operations and Strategy
Aecon Secures Major Contract for Pickering Nuclear Station Refurbishment
Positive
Jan 23, 2025
Aecon Group Inc., in a joint venture with AtkinsRéalis, has been awarded a significant contract by Ontario Power Generation for the refurbishment of four units at the Pickering Nuclear Generating Station. The contract, valued at approximately $2.1 billion, includes early works and definition phase activities, with Aecon holding a 50% interest. This project builds on Aecon’s successful track record with nuclear refurbishments, notably the Darlington Project, and highlights the company’s pivotal role in delivering clean and reliable energy solutions, thereby boosting Ontario’s nuclear supply chain and meeting future electricity demands.
Aecon Group to Announce Q4 and Year-End 2024 Financial Results
Jan 9, 2025
Aecon Group Inc. announced the release of its fourth quarter and year-end 2024 financial results scheduled for March 5, 2025, after market close. A live webcast and conference call are planned for March 6, 2025, at 9 a.m. Eastern Time. The announcement provides stakeholders with a chance to review Aecon’s financial performance and strategic positioning in the industry, potentially impacting investor relations and market expectations.
Aecon Group Acquires United Engineers
Dec 17, 2024
Aecon Group Inc. has successfully completed its acquisition of United Engineers & Constructors, enhancing its capabilities in nuclear and conventional power generation. This strategic move is expected to drive growth across the U.S. and other key markets by leveraging United’s technical expertise and expanding Aecon’s service offerings in North America.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.