Aecom (ACM -1.18%) is an engineering and consulting giant that designs highways, transit lines, and water systems, and then manages the contractors who actually build them.
This week showed investors how important that distinction is as someone else's work hurt Aecom, sending its shares down 17.9% to a 52-week low of $60.35 as of Friday noon, according to data provided by S&P Global Market Intelligence.
Image source: Getty Images.
Why Aecom stock is crashing
Aecom reported a net loss of $0.65 per share for its third quarter of fiscal year 2026 this week versus net earnings per share (EPS) of $1.32 in the year-ago quarter.
Back in 2019, Aecom signed on to manage a construction project under terms and conditions that would not meet its current risk policies. Subcontractors are running behind, and costs are exceeding estimates, resulting in a $377 million pre-tax loss for Aecom in Q3.
That single number turned a quarter that should have posted a profit into a loss instead, sending Aecom shares tanking.
NYSE: ACM
Key Data Points
Aecom's revenue slipped 14% year over year in Q3, and management slashed full-year adjusted EPS to $3.95-$4.15 per share and free cash flow (FCF) estimate to only $300 million.
Just months ago, Aecom raised its FY 2026 guidance to EPS of $5.90-$6.10 and FCF of $400 million.
Aecom's backlog is surging, but the stock isn't
Take the project loss out, and the story flips.
Aecom's backlog jumped 13% to a record $27.8 billion. A book-to-burn ratio of 1.6 means the company is winning more work than it's burning through.
Those numbers confirm it's not a demand problem, and Aecom's business continues to grow. One bad project just tore an otherwise strong quarter down.
The harder question is what investors can't shake: what if there's another one? Also, this particular project isn't expected to be completed until mid-2027, which could leave room for further nasty shocks for Aecom. The company also depends heavily on government contracts, which puts it squarely in the path of any federal budget squeeze.
Could Aecom, then, meet its long-term financial targets of compound annual growth in adjusted EPS of at least 15% between 2026 and 2029? Management is confident it will, but that earnings growth target assumes clean execution over the next four years. That, when one quarter just showed that Aecom may not really have that kind of control over the outcome, given the external risks and threats to its business.
