AECOM (ACM:NYS) Fundamental Valuation Report

Fundamental Valuation Report

AECOM(ACM:NYS)

Industrials:Engineering & Construction

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$32.49 (USD) 14/11/2018

Weighted Valuation
$35.09 (USD)

Overall Rating
Undervalued by 8.0%

Valuation Models Analyst Consensus: $34.50 (USD)
(in order of importance) Adjusted Book Value: $36.69 (USD)
Multiples: $33.64 (USD)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Undervalued on an Asset Valuation

Company Overview (ACM:NYS USD)

Price 32.49
Range 31.54 – 32.70
52 week 29.14 – 39.62
Open 31.58
Vol / Avg. 2.15M/1.16M
Mkt cap 5.08B
P/E 38.68
Div/yield 0.00/0.00
EPS 0.84
Shares 156.35M
Beta 1.58

Company Description

Los Angeles-based Aecom is one of the world’s largest providers of engineering and construction services, with an emphasis on infrastructure and government services. Its integrated services model designs, builds, finances, and operates a broad range of technical project and program services. Aecom’s customers include military and security entities, transportation facilities, environmental agencies, and energy companies. The company generated fiscal 2017 sales and adjusted EBIT of $18.2 billion and $825 million, respectively, and employs 82,000.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for ACM:NYS

Using a discounted cash flow model we generated an intrinsic value of $62.39 (USD) for ACM:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

ACM:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $62.39 1% 5% 1% 5%
WACC (or Ke) 9.32 $79.19 $50.19
Terminal Growth Rate 3.00 $51.62 $77.22
Tax Rate 0.11 $67.04 $57.74
Cash Flow 985,504,000 $58.31 $66.48
Capital Expenditures 17,783,600 $62.46 $62.33
Long Term Debt 4,295,217,000 $63.77 $61.02

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $42.78 (USD) for ACM:NYS. We also generated a valuation of $54.44 (USD) using other metrics and comparables.
The comparable companies were EMCOR Group (EME:NYS), Fluor (FLR:NYS), Jacobs Engineering Group (JEC:NYS), KBR (KBR:NYS) and Tetra Tech (TTEK:NAS).

Company ACM:NYS End Date Value
Earnings/Share $0.84 (USD)
Book Value/Share $25.98 (USD)
Sales/Share $121.58 (USD)
Cash Flow/Share $3.05 (USD)
EBITDA/Share $4.39 (USD)
Price Based on Comps Adjustment Factor (%)
$17.78 (USD) -21.1
$60.85 (USD) -26.2
$84.29 (USD) -44.5
$49.92 (USD) 3.4
$50.39 (USD) 19.2
ACM:NYS Ratios Used Average Values EME:NYS FLR:NYS JEC:NYS KBR:NYS TTEK:NAS
33.49 PE Ratio 21.17 16.06 24.50 33.52 5.46 26.31
1.12 PB Ratio 2.34 2.30 2.03 1.79 1.70 3.90
0.24 PS Ratio 0.69 0.53 0.31 0.74 0.62 1.27
9.56 PCF Ratio 55.12 21.58 149.32 21.52 0.00 28.04
10.90 EV to EBITDA 11.47 9.50 7.70 17.17 7.12 15.89

Multiples

Using a multiples approach we generated a valuation of  $33.64 (USD) for ACM:NYS

Company ACM:NYS End Date Value
Earnings/Share $0.84 (USD)
Book Value/Share $25.98 (USD)
Sales/Share $121.58 (USD)
Cash Flow/Share $3.05 (USD)
EBITDA/Share $4.39 (USD)
Price Based on Comps Adjustment Factor
$25.79 (USD) 0
$36.59 (USD) 0
$35.96 (USD) 0
$22.29 (USD) 0
$47.54 (USD) 0
Ratios Ratio Average
PE Ratio 30.71
PB Ratio 1.41
PS Ratio 0.30
PCF Ratio 7.32
EV to EBITDA 10.83

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  ACM:NYS for the last 10 years was  1.41

We ran the Adjusted Book Value for  ACM:NYS and generated a book value of  $26.07 (USD)
By multiplying these we get an adjusted valuation of  $36.69 (USD)

Analyst Data

In the Stockcalc database there are 4 analysts that provide a valuation for ACM:NYS. The 4 analysts have a concensus valuation for ACM:NYS for 2019 of $34.50 (USD).

ACM:NYS AECOM

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
1 5 0 3.3333 Hold 2018-11-13

Current Price: 32.49 USD

Analyst Consensus
USD Millions 2019 2020 2021
Mean EPS 2.80 3.17 3.09
# EPS Analysts 6 5 1
Mean Revenue 20,687.20 20,966.10 21,851.60
# Revenue Analysts 5 4 1
Mean Target Price 34.50
Mean Cash Flow 3.56 4.61 4.83
Mean EBITDA 919.20 1,015.10 956.80
Mean Net Income 439.30 483.00 497.10
Mean Debt Outstanding 3,748.20 3,448.20
Mean Tax Rate 25.00 24.00
Mean Growth Rate 9.23
Mean Capital Expenditure 144.30 144.50 116.00

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

Notice to User


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