Why AECOM Technology Shares Soared

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of AECOM Technology (NYSE: ACM  ) climbed as much as 19% today after posting a better-than-expected free cash flow in its earnings report.

So what: The planning and construction consulting service actually missed earnings estimates by a cent but generated strong free cash flow to make up for the earnings miss. Investors had been previously concerned about the company's cash position as it carries more than a $1 billion in debt, but its results brought net debt to its lowest point in the last seven quarters. Net income was down slightly from a year ago, though EPS moved up a penny to $0.63 due to share buybacks.

Now what: Heading into earnings season, some observers had argued that the company's valuation was attractive, and that still looks to be the case at a P/E of just 8.3. With a backlog of $15.8 billion sitting on its books, the company has plenty of new business on the way. If AECOM keeps its costs under control, this could be a solid pick over the coming months.

Need to stay connected with AECOM? Add AECOM Technology to My Watchlist.

Fool contributor Jeremy Bowman holds no positions in the companies above. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

 

 


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