Aecon Group Inc. (ARE) AI Stock Analysis

• Market Cap: C$1.08B
• Dividend Yield: 4.4%
• Average Volume (3M): 522.71K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.86
• Revenue Growth: -8.64%
• EPS Growth: -136.62%
• Country: CA
• Employees: 9,427
• Sector: Industrials
• Sector Strength: 78
• Industry: Engineering & Construction
• EPS (TTM): -0.96
• Shares Outstanding: 62,834,007
• 10 Day Avg. Volume: 552,295
• 30 Day Avg. Volume: 522,714
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: C$21.56
• Price Target Upside: 24.91% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 9

Aecon Group Inc. struggles with financial and operational challenges, reflected in declining revenues and profitability. The technical analysis indicates a bearish trend, with the stock trading below key moving averages. However, the company shows some strengths, such as a substantial backlog and promising growth in certain segments. The dividend yield offers some appeal, but overall risks persist.

Positive Factors

Financial Performance

The company's Q4/24 AFF exceeded street expectations, indicating strong performance.

Investment Offer

An all-cash offer of $55.00 provides a short-term return for investors.

Operational Strength

Solid quarterly results demonstrate the company's operational strength.

Negative Factors

Cost Pressures

Earnings continue to be pressured by legacy fixed price projects and sluggish margins in other divisions of the Construction segment.

Legacy Projects

Legacy project risk remains, impacting the company's future stability.

Tariff Risks

There is a need for tariff visibility, indicating potential regulatory challenges.

Aecon Group Inc. Business Overview & Revenue Model

Company Description

Aecon Group Inc., together with its subsidiaries, provide construction and infrastructure development services to private and public sector clients in Canada, the United States, and internationally. It operates through two segments, Construction and Concessions. The Construction segment focuses primarily on the civil infrastructure, urban transportation systems, nuclear power infrastructure, utility infrastructure, and conventional industrial infrastructure market sectors. The Concessions segment engages in the development, building, construction, financing, and operation of construction projects by way of public-private partnership contract structures. The company was formerly known as Prefac Concrete Co. Ltd. and changed its name to Aecon Group Inc. in June 2001. Aecon Group Inc. was founded in 1877 and is headquartered in Toronto, Canada.

How the Company Makes Money

Aecon Group Inc. generates revenue through its diversified operations in the construction and infrastructure sectors. The company's primary revenue streams include project management and construction services for large infrastructure projects, such as highways, bridges, transit systems, and energy facilities. Additionally, Aecon is involved in the utilities sector, providing services for the construction and maintenance of pipelines and other utility infrastructure. The company also earns income from its concessions business, where it invests in and operates infrastructure assets, generating long-term revenue. Aecon's significant partnerships with government bodies and private clients across various sectors, along with its strategic alliances and joint ventures, contribute to its financial performance.

Aecon Group Inc. Financial Statement Overview

Summary

Aecon Group Inc. faces significant financial challenges with declining revenues, negative profitability, and cash flow constraints. The balance sheet remains moderately leveraged, but operational inefficiencies and cash flow issues pose risks. The company needs to focus on improving operational efficiency and cash flow generation to stabilize its financial position.

Income Statement

Aecon Group Inc. shows declining revenue and profitability margins. The TTM data indicates a negative EBIT and net income, suggesting operational challenges. Gross profit margin is also decreasing, reflecting reduced efficiency in cost management. Revenue has declined significantly from 2023, and the company has not demonstrated consistent revenue growth over the past few years.

Balance Sheet

The company's balance sheet reveals a moderate debt-to-equity ratio, indicating a balanced approach to leverage, although total debt has increased. However, the equity ratio reflects a modest portion of financing from equity. Return on equity is negative due to net losses, which highlights operational inefficiencies. The company maintains a reasonable level of cash and cash equivalents, providing some liquidity cushion.

Cash Flow

Aecon Group Inc. exhibits a volatile cash flow position with negative free cash flow in recent periods, indicating challenges in generating cash from operations after capital expenditures. The operating cash flow to net income ratio is low due to negative net income, reflecting poor cash generation relative to earnings. The free cash flow to net income ratio is also negative, underscoring cash flow management issues.

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

• Technical Analysis Sentiment: Neutral
• Last Price: 17.26
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:ARE, the sentiment is Neutral. The current price of 17.26 is above the 20-day moving average (MA) of 16.70, below the 50-day MA of 18.11, and below the 200-day MA of 21.42, indicating a neutral trend. The MACD of -0.43 indicates Negative momentum. The RSI at 51.49 is Neutral, neither overbought nor oversold. The STOCH value of 63.56 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSE:ARE.

Aecon Group Inc. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
WSP	80 Outperform	C$32.51B	46.10	9.33%	0.60%	11.98%	22.53%
BDT	79 Outperform	C$1.28B	12.58	26.59%	2.93%	21.39%	37.48%
MTL	73 Outperform	C$1.16B	10.79	10.81%	6.04%	3.28%	-14.21%
Sector *	64 Neutral	$4.27B	11.81	5.31%	249.66%	4.08%	-8.61%
ARE	52 Neutral	C$1.08B	―	-5.87%	4.40%	-8.64%	-136.62%

Aecon Group Inc. Corporate Events

Aecon Reports Record Backlog Amidst First Quarter Losses

Aecon Group Inc. reported a record backlog of $9.7 billion for the first quarter of 2025, indicating strong future revenue prospects despite an operating loss of $40.7 million. The company secured significant new contracts, including a major project with Ontario Power Generation and a substantial share in the Scarborough Subway Extension, which bolsters its market position and underscores its commitment to sustainable growth.

Spark’s Take on TSE:ARE Stock

According to Spark, TipRanks’ AI Analyst, TSE:ARE is a Neutral.

Aecon Group Inc. is currently facing financial challenges with declining revenues and profitability, impacting its financial performance score. However, the company shows potential for recovery with a strong backlog and strategic growth initiatives, reflected in the earnings call and corporate events scores. The technical analysis indicates weak momentum, and valuation is hampered by negative earnings, though the dividend yield provides some support. Overall, the stock score suggests cautious optimism for future improvement.

To see Spark’s full report on TSE:ARE stock, click here.

Aecon Celebrated as One of Canada’s Greenest Employers

Aecon Group Inc. has been recognized as one of Canada’s Greenest Employers and has released its 2024 Sustainability Report, highlighting its significant strides in sustainable construction. In 2024, 59% of Aecon’s revenue was tied to sustainability projects, including clean energy and urban transportation initiatives. The company achieved a 34% reduction in Scope 1 and Scope 2 emissions since 2020, surpassing its 2030 target. Aecon also emphasized its commitment to community engagement and economic prosperity, notably through its Indigenous procurement efforts, spending $127 million on goods and services from the Indigenous economy.

Spark’s Take on TSE:ARE Stock

According to Spark, TipRanks’ AI Analyst, TSE:ARE is a Neutral.

Despite financial challenges and weak technical indicators, Aecon’s stock is supported by a solid backlog and recent significant contract wins. While the current performance is underwhelming, strategic initiatives in new projects and markets, along with a healthy dividend yield, provide a foundation for potential recovery and growth.

To see Spark’s full report on TSE:ARE stock, click here.

Aecon Group Inc. to Announce Q1 2025 Financial Results

Aecon Group Inc. announced the release of its first quarter 2025 financial results scheduled for April 23, 2025, after market close, with a live webcast and conference call planned for April 24, 2025. This announcement is significant for stakeholders as it provides insights into the company’s financial performance and strategic direction, potentially impacting its market positioning and investor relations.

Aecon Group Inc. Reports 2024 Financial Results and Strategic Developments

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.