ACM
Aecom
$58.20
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 48.3% above fair value
You pay
$58.20
Bear
$30.52
Fair
$39.24
Bull
$47.96
Bear
$30.52
-47.6%
$2.18 × 14x
Fair
$39.24
-32.6%
$2.18 × 18x
Bull
$47.96
-17.6%
$2.18 × 22x
Adjust Assumptions
18.0x
2.18$
Key Value Driver
Through-cycle normalized EPS ($2.18)
Implied Market Multiple
26.7x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (25 analysts)
$81.56
Divergence from AlphaVal
52%
Summary
Using 7-year normalized EPS of $2.18 at a 18x cycle multiple, the base-case value is $39.24 per share.
Warnings
This company has a built-in lending arm whose debt is mixed in with the main business. We capped the debt adjustment to avoid overstating what the core business owes.
Recent profits ($4.21/share) are 93% above the mid-cycle average ($2.18). Buying based on peak profits is the most common mistake with boom-and-bust businesses.
Wall Street's average price target is $81.56 (from 25 analysts). Our estimate is 52% below the consensus -- consider that gap carefully.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing