Shares of AECOM Technology (ACM 0.42%) spiked 14.8% in early Monday trading, and as of 3:15 p.m. EST, were still holding on to 13.1% gains.
AECOM is one of the biggest names in American construction and engineering. It's purported to be a key player in construction of Elon Musk's proposed Hyperloop transportation system, for example. Knowing that, if you guessed that AECOM would be a prime beneficiary of the boom in infrastructure stocks that's been going on ever since Donald Trump was elected president...you'd be right.
From Trump's election through the end of last week, AECOM stock tacked on 15% to its market capitalization. This morning AECOM reported fiscal Q4 and full-year earnings, and the subsequent rise in stock price promises to nearly double last week's gain -- not because of earnings, but in spite of them.
Fact is, AECOM's earnings report was pretty terrible. Whereas Wall Street had expected the company to report $0.74 per share in pro forma earnings for fiscal Q4, the best AECOM could come up with was $0.65. Actual GAAP earnings, meanwhile, were a mere $0.05.
Revenue-wise, the company likewise fell short, reporting $4.32 billion where the Street had anticipated $4.68 billion. And to wrap up the trifecta of poor news, AECOM guided investors to expect somewhere between $2.70 and $3.10 per share in profits in fiscal 2017. Wall Street had been looking for $3.24 per share.
And yet, investors remain enthused about AECOM. Apparently, comments from AECOM CEO Michael Burke to the effect that the company "entered fiscal 2017 with strong momentum, and our confidence in the long-term trajectory of our business has never been greater," when combined with last week's election results, have been enough to -- ahem -- trump the actual numbers that AECOM is guiding investors to expect.
Will these investors be proven right, though? With AECOM now trading at more than 50 times earnings, I wouldn't bet on it.