AECOM's Q3 Earnings Cliff: Bargain at 9.4x or Value Trap
AECOM reported Q3 EPS of -$0.50 versus $1.46 consensus, a 134% miss that halted a three-quarter win streak and sent shares down 49% to $58.94. The infrastructure firm trades at 9.4x forward P/E agains
AECOM Wins Highway 413 as Q3 Loss Looms Over Recovery
NEW YORK, October 18 —
AECOM (ACM) landed the Highway 413 contract while its shares at $58.94 sit against an analyst consensus target of $84.33, built on a quarter in which EPS came in at -$0.50 against a $1.46 estimate. Whether Q3's loss was a one-time charge or structural margin erosion is what separates a 9.4x forward P/E bargain from a value trap.
- Q3 FY2026 EPS: -$0.50 vs. a $1.46 consensus, per the August 10 8-K; -134% miss ending three consecutive beats.
- Shares at $58.94, down ~49% from recent highs; analyst consensus target $84.33.
- TTM revenue $15.39 billion, down 14.2% year-over-year; gross margin 5.7%; free cash flow $380 million.
Three Beats, Then a Cliff
AECOM is a Dallas-headquartered infrastructure consultancy with roughly 51,000 employees, advising governments and private clients on transportation, water, environmental, and energy projects across its Americas and International segments. For three consecutive quarters it beat consensus: $1.29 versus $1.16 in one quarter, $1.59 versus $1.54 in another. When the company filed its Q3 FY2026 8-K on August 10, 2026, the reported figure was -$0.50 per share, a miss that erased any positive read-across from the prior streak. Shares had already fallen approximately 49% from recent highs before that filing, and contract wins like Highway 413 have not been enough to reverse the trend.
The Margin Math Behind the Target
At 5.7% gross margin on $15.39 billion in TTM revenue, AECOM operates with the thin margins typical of government contracting, where pass-through subcontracted work is recognized as revenue. Free cash flow of $380 million shows cash conversion is healthier than gross margin alone implies, but a 14.2% year-over-year revenue decline compresses the absolute cash pool. At a 9.4x forward P/E, the multiple assumes earnings recover from Q3's anomaly and embeds the $84.33 analyst target versus today's $58.94. With $1.02 billion in cash against $3.33 billion in debt, the balance sheet does not impose an immediate financing constraint on that recovery path.
| Ticker | Mkt cap | Fwd P/E | 52-wk |
|---|---|---|---|
| ACM | $7.6B | 9.4x | -55.9% |
| J | $16.7B | 17.1x | -13.2% |
| KBR | $4.6B | 8.9x | -16.4% |
| TTEK | $8.9B | 20.3x | +4.0% |
| FLR | $6.3B | 13.9x | -1.9% |
| GVA | $4.9B | 13.6x | +3.9% |
What Q4 Needs to Show
AECOM's September 16, 2026 8-K disclosed a change in directors or principal officers, adding another variable as investors weigh whether Q3 was an isolated charge or a structural break. The trailing EPS of $2.84 per share confirms the TTM picture has not fully collapsed; the watch item is whether Q4 returns to the $1.29, $1.59 range that defined the prior three-quarter streak. Revenue trajectory is the secondary signal: the 14.2% TTM decline needs to stabilize before margin expansion arguments gain traction. For the full financial picture, run the free AECOM deep-dive →
Basis Report is independent research for informational purposes. It is not investment advice and not a recommendation to buy or sell any security.
Frequently Asked Questions
AECOM Q3 earnings per share
AECOM reported Q3 FY2026 EPS of -$0.50 per share, missing the $1.46 consensus estimate by 134%. This ended a three-quarter beat streak where the company had reported earnings of $1.29 versus $1.16 in one quarter and $1.59 versus $1.54 in another.
AECOM stock price and analyst target
AECOM shares trade at $58.94 against an analyst consensus target of $84.33, implying upside if that target materializes. At a 9.4x forward P/E, the valuation appears cheap only if the company's earnings recover from Q3's anomaly rather than reflecting structural margin deterioration.
AECOM gross margin and revenue trends
AECOM operates with a 5.7% gross margin on TTM revenue of $15.39 billion, typical of government contracting where pass-through work is recognized as revenue. Revenue has declined 14.2% year-over-year, compressing the absolute cash pool despite free cash flow of $380 million.
AECOM Highway 413 contract
AECOM won the Highway 413 contract, though the victory has not been sufficient to reverse the stock's decline of approximately 49% from recent highs. The company must stabilize its revenue trajectory before contract wins can drive a meaningful recovery narrative.
AECOM business and operations
AECOM is a Dallas-headquartered infrastructure consultancy with roughly 51,000 employees. The company advises governments and private clients on transportation, water, environmental, and energy projects across its Americas and International segments.
AECOM has won the Highway 413 contract at a moment when its shares trade at $58.94 — against an analyst consensus target of $84.33 — and have never fully recovered from a Q3 quarter in which EPS came in at -$0.50, a 134% miss against the $1.46 consensus estimate. Contract wins are accumulating, but the financials have not yet confirmed the recovery that analysts are pricing in.
Sources & Filings