Engineering and Design Services Stocks Q3 Results: Benchmarking AECOM (NYSE:ACM)

January 06, 2025 at 04:08 AM EST

ACM Cover Image

Earnings results often indicate what direction a company will take in the months ahead. With Q3 behind us, let’s have a look at AECOM (NYSE: ACM) and its peers.

Companies providing engineering and design services boast ever-evolving technical expertise. Compared to their counterparts who manufacture and sell physical products, these companies can also pivot faster to more trending areas due to their smaller physical asset bases. Green energy and water conservation, for example, are current themes driving incremental demand in this space. On the other hand, those providing engineering and design services are at the whim of construction and infrastructure project volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates.

The 5 engineering and design services stocks we track reported a strong Q3. As a group, revenues missed analysts’ consensus estimates by 1.2% while next quarter’s revenue guidance was 1.9% below.

In light of this news, share prices of the companies have held steady as they are up 4.1% on average since the latest earnings results.

Weakest Q3: AECOM (NYSE: ACM)

Founded in 1990 when a group of engineers from five companies decided to merge, AECOM (NYSE: ACM) provides various infrastructure consulting services.

AECOM reported revenues of $4.11 billion, up 7% year on year. This print was in line with analysts’ expectations, but overall, it was a mixed quarter for the company with a narrow beat of analysts’ EBITDA estimates.

“We delivered strong results that reflect the strength of our strategy and our competitive advantage, including exceeding the mid-points of our previously-increased EBITDA and EPS guidance and generating record free cash flow,” said Troy Rudd, AECOM’s chief executive officer.

Unsurprisingly, the stock is down 1.3% since reporting and currently trades at $107.75.

Read our full report on AECOM here, it’s free.

Best Q3: Dycom (NYSE: DY)

Working alongside some of the most popular mobile carriers in the world, Dycom (NYSE: DY) builds and maintains telecommunications infrastructure.

Dycom reported revenues of $1.27 billion, up 12% year on year, outperforming analysts’ expectations by 4.3%. The business had a very strong quarter with a solid beat of analysts’ adjusted operating income estimates.

Dycom scored the biggest analyst estimates beat among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 10.2% since reporting. It currently trades at $182.

Is now the time to buy Dycom? Access our full analysis of the earnings results here, it’s free.

Sterling (NASDAQ: STRL)

Involved in the construction of a major highway, the Grand Parkway in Houston, TX, Sterling Infrastructure (NASDAQ: STRL) provides civil infrastructure construction.

Sterling reported revenues of $593.7 million, up 6% year on year, falling short of analysts’ expectations by 2.3%. Still, its results were good as it locked in a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ EPS estimates.

Interestingly, the stock is up 1.6% since the results and currently trades at $178.31.

Read our full analysis of Sterling’s results here.

MasTec (NYSE: MTZ)

Involved in the 1996 Olympic Games MasTec (NYSE: MTZ) is an infrastructure construction company that specializes in the telecommunications, energy, and utility industries.

MasTec reported revenues of $3.25 billion, flat year on year. This result came in 5.4% below analysts' expectations. More broadly, it was actually a strong quarter as it logged a solid beat of analysts’ EPS estimates and an impressive beat of analysts’ adjusted operating income estimates.

MasTec had the weakest performance against analyst estimates and slowest revenue growth among its peers. The stock is up 20.7% since reporting and currently trades at $148.40.

Read our full, actionable report on MasTec here, it’s free.

EMCOR (NYSE: EME)

Through its network of over 70 subsidiaries, EMCOR (NYSE: EME) provides electrical, mechanical, and building construction and services

EMCOR reported revenues of $3.70 billion, up 15.3% year on year. This number missed analysts’ expectations by 2.5%. In spite of that, it was a strong quarter as it put up a solid beat of analysts’ EBITDA estimates.

EMCOR achieved the fastest revenue growth but had the weakest full-year guidance update among its peers. The stock is up 9.6% since reporting and currently trades at $472.76.

Read our full, actionable report on EMCOR here, it’s free.

Market Update

Thanks to the Fed's series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market has thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% each in November and December), and a notable surge followed Donald Trump's presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.

Want to invest in winners with rock-solid fundamentals? Check out our Hidden Gem Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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