It has been about a month since the last earnings report for Aecom Technology (ACM Quick QuoteACM - Free Report) . Shares have added about 7.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Aecom due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

AECOM Q3 Earnings Surpass Estimates, Backlog Up Y/Y

AECOM posted decent third-quarter fiscal 2024 (ended June 30) results, with earnings surpassing the Zacks Consensus Estimate. On a year-over-year basis, the top and bottom lines increased, backed by solid organic growth in net service revenues (NSR) in its reportable segments.

Delving Deeper

The company reported adjusted earnings per share (EPS) of $1.16, topping the consensus mark of $1.12 by 3.6% and increasing 23% from 94 cents reported in the prior-year quarter. The upside was backed by benefits received from high-returning organic growth initiatives.

Revenues of $4.15 billion rose 13% on a year-over-year basis. Adjusted NSR moved up 8% year over year to $1.83 billion.

Segment Details

Americas’ revenues were $3.25 billion, up 15% from the prior-year quarter’s levels. NSR of $1.1 billion moved up 8% year over year, driven by solid end-market performances and continued addressable market expansion. Adjusted operating income of $212 million was up 11% year over year. Adjusted operating margin (on an NSR basis) expanded 50 basis points (bps) year over year to 19.3%. The total backlog at the fiscal third-quarter end was $17.35 billion compared with $16.86 billion a year ago.

International revenues were up 8% year over year to $904 million. NSR increased 7% year over year to $729 million, suggesting growth across the largest markets. Adjusted operating income in the segment rose 25% year over year to $85 million. Adjusted operating margin (on an NSR basis) also moved up 180 bps year over year to 11.7%. The upside was driven by increased focus on its highest-returning end markets. The total backlog at the end of the quarter was $6.01 billion compared with $6.34 billion from a year ago.

AECOM Capital's quarterly revenues were $0.2 million.

Operating Highlights

Adjusted segment operating profit amounted to $261 million, up 19% from the year-ago quarter’s levels. The segment’s adjusted operating margin (NSR) improved 60 bps to 15.2% year over year. The upside was driven by high-returning organic growth.

Adjusted EBITDA also rose 9% year over year to $247 million.

Backlog

As of the fiscal third quarter’s end, the total backlog was $23.36 billion compared with $23.21 billion reported in the prior-year period. The current backlog level includes 54.8% contracted backlog growth.

The design business backlog rose 3% to $21.89 billion. The metric was driven by a near-record win rate and continued strong end-market trends.

Liquidity & Cash Flow

At the end of the fiscal third quarter, AECOM’s cash and cash equivalents totaled $1.6 billion compared with $1.19 billion at the end of Dec 31, 2023. The total debt (excluding unamortized debt issuance costs) as of Jun 30, 2024, was $2.54 billion, up from $2.22 billion at fiscal 2023-end.

At the fiscal third quarter’s end, operating cash flow increased 29% year over year to $529 million. Adjusted free cash flow also increased to $434 million from $328 million reported a year ago.

Fiscal 2024 Guidance Raised

The company still anticipates to generate organic NSR growth in the range of 8-10% in the fiscal 2024. It now expects adjusted EPS in the range of $4.45-$4.55, up from the prior projection of $4.35-$4.55. This indicates a 13-21% improvement from fiscal 2023 levels on a constant-currency basis, considering the mid-point of the guidance.

Also, it projects an adjusted operating margin of 15.6%, suggesting a 90-bps increase on a year-over-year basis. AECOM expects adjusted EBITDA guidance in the range of $1,075-$1,105 million compared with the prior expectation of $1,070-$1,105 million.

The company anticipates more than 100% adjusted net income to free cash flow conversion, an average fully diluted share count of 136 million and an effective tax rate of 25%. Also, it expects to deliver a return on invested capital of approximately 20% in the fiscal 2024.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

VGM Scores

Currently, Aecom has a great Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Aecom has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

Aecom belongs to the Zacks Engineering - R and D Services industry. Another stock from the same industry, Fluor (FLR Quick QuoteFLR - Free Report) , has gained 1.7% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.

Fluor reported revenues of $4.23 billion in the last reported quarter, representing a year-over-year change of +7.3%. EPS of $0.85 for the same period compares with $0.76 a year ago.

For the current quarter, Fluor is expected to post earnings of $0.81 per share, indicating a change of -20.6% from the year-ago quarter. The Zacks Consensus Estimate has changed -1.6% over the last 30 days.

Fluor has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.