Bear of the Day: AECOM (ACM)

AECOM ACM posted a record backlog in the second quarter of 2026 but a surprise tax loss has led to big earnings cuts. This Zacks Rank #5 (Strong Sell) is now expected to see an earnings decline in 2026.

AECOM is an infrastructure professional services firm in water, environment, energy, transportation, and buildings.

The company partners with public – and private- sector clients to create solutions from advisory, planning, design and engineering to program and construction management. It operates worldwide.

AECOM Misses Big on Earnings in the Fiscal Third Quarter of 2026

On Aug 10, 2026, AECOM reported its fiscal third quarter 2026 results and missed on the Zacks Consensus Estimate by $1.99. Earnings were a loss of $0.50 versus the consensus of $1.49.

The big surprise was in a $337 million pre-tax charge due to higher projected costs to complete a Construction Management project.

That project was awarded in 2019 under terms and conditions that would not be acceptable after the substantial changes AECOM implemented to its risk policies several years ago.

But the damage was done even though the backlog was up 13% to a new record driven by a record $4.2 billion in wins.

The design pipeline also increased again to a new all-time high.

Analysts Cut AECOM’s Earnings Estimates for Fiscal 2026 and 2027

With that big of an earnings miss in the third quarter, it’s not a surprise that the analysts cut their fiscal 2026 earnings estimates as well.

Three estimates were cut for 2026 in the last month, pushing down the Zacks Consensus to $4.48 from $5.97. That’s an earnings decline of 14.8% as the company made $5.26 last year.

Analysts were also bearish on fiscal 2027. Four estimates were cut for next year in the last month, pushing down the Zacks Consensus Estimate to $6.05 from $6.76. However, they do have AECOM returning to earnings growth of 35% in fiscal 2027.

Here’s what it looks like on the price and consensus chart.

Shares of AECOM Sink 

The Street didn’t like the pre-tax loss surprise so the shares sold off on the news. But they had already been falling prior to the earnings report.

Over the last year AECOM fell 46.7% and it is trading near 5-year lows.

Is it cheap?

AECOM trades with a forward price-to-earnings (P/E) ratio of 14.5. A P/E ratio under 15 usually indicates a company is undervalued.

It also has a price-to-sales (P/S) ratio of 0.5. A P/S of 1.0 or less usually indicates a company has value. An investor is buying every $1.00 of sales for just $0.50.

But investors interested in AECOM might want to wait to make sure next year’s earnings turnaround is for real before buying in. Watch for positive earnings estimate revisions.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research