AECOM engages in designing, building, financing, and operating infrastructure assets worldwide. The company operates through three segments: Design and Consulting Services (DCS), Construction Services (CS), and Management Services (MS). The company was founded in 1980 and is based in Los Angeles, California.
ACM Price Forecast Based on DCF Valuation
DCF Fair Value Target:
We started the process of determining a valid price forecast for Aecom with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that Aecom ranked in the 18th percentile in terms of potential gain offered. We should note, though, that the most conservative analysis suggests this stock will yield negative results -- and thus may be a potential short opportunity. The most interesting components of our discounted cash flow analysis for Aecom ended up being:
Aecom's effective tax rate, as measured by taxes paid relative to net income, is at 0 -- greater than only 0% of US stocks with positive free cash flow.
Aecom's interest coverage rate -- a measure of gross earnings relative to interest payments -- comes in at -1.04. This coverage rate is greater than that of merely 16.89% of stocks we're observing for the purpose of forecasting via discounted cash flows.
The weighted average cost of capital for the company is 11. This value is greater than 82.48% stocks in the Industrials sector that generate free cash flow.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
For other companies in the Industrials that have a similar discounted cashflow valuation profile (and ensuing price forecasts) as ACM, try ABB, CVA, HTLD, EPAC, and GE.
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