ACM – Market expectations are for Uniform ROA contraction, but management may have concerns about federal spending, margins, and their EPS

• AECOM (ACM:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 19.4x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm, and management may have concerns about federal infrastructure spending, their operating margins, and meeting their EPS guidance.
• Specifically, management may have concerns about the sustainability of industrial market optimism, the potential for proposed federal infrastructure spending to activate the built-up backlog of projects, and their portfolio’s alignment with client interests. Additionally, they may lack confidence in their ability to capitalize on opportunities stemming from the distribution of federal funds through the American Rescue Plan, improve their capture rates and gain market share, and outgrow the industry. In addition, they may lack confidence in their ability to meet their 2024 EPS goals, maintain operating margins improvements, and manage their interest expense.