Breaking Down AECOM (ACM) Financial Health: Key Insights for Investors

You're looking at AECOM (ACM) because the infrastructure and sustainability megatrends are real, and you want to know if the balance sheet justifies the growth story-honestly, the numbers from the $\mathbf{2 0 2 5}$ fiscal year are compelling. The company is executing its strategy, evidenced by the fact that they've raised their full-year guidance three times, now targeting adjusted earnings per share (EPS) between $\mathbf{\$ 5 . 2 0}$ and $\mathbf{\$ 5 . 3 0}$, a $\mathbf{1 6 \%}$ increase at the mid-point. That's a strong signal. Plus, the firm's total backlog-the value of contracted work it hasn't yet billed-hit a record high of nearly $\mathbf{\$ 2 4 . 5 9}$ billion in the third quarter of $\mathbf{2 0 2 5}$, giving you incredible visibility into future revenue. We need to dig into how they achieved a $\mathbf{1 7 . 1 \%}$ segment adjusted operating margin in Q3, exceeding their long-term target early, and what that $\mathbf{\$ 5 5 1}$ million in year-to-date free cash flow (FCF) defintely means for capital allocation and shareholder returns, especially with the stock trading around a Buy consensus. Here's the quick math on their margin expansion and what it signals for your investment thesis.

Revenue Analysis

If you're looking at AECOM (ACM), the headline revenue numbers can be a little misleading. The key takeaway is this: while total reported revenue growth has slowed in 2025, the underlying, high-margin consulting business-what they call Net Service Revenue (NSR)-is showing solid, consistent growth. That's where the real value is.

For the trailing twelve months (TTM) ending June 30, 2025, AECOM's total revenue was approximately $16.075 billion, representing a modest year-over-year growth of about 1.5%. This slowdown is partly due to the nature of their business, which includes pass-through subcontractor costs that can fluctuate. For example, Q2 fiscal year 2025 total revenue actually saw a 4% decline to $3.772 billion, but their NSR for the same quarter grew 4%. That's the important distinction.

Here's the quick math on where AECOM makes its money, focusing on their two primary geographic segments:

• Americas Segment: This is the powerhouse, driving the majority of revenue and margin expansion. In Q3 2025, this segment generated $3.3 billion in revenue, a 1% increase year-over-year. Crucially, its NSR grew by a strong 8%, fueled by public infrastructure investment in the U.S. and Canada.
• International Segment: This segment reported $901 million in Q3 2025 revenue, a slight decline from the prior year. Still, its NSR increased by 3%, showing underlying strength in markets like the U.K. and the Middle East.

To be fair, the Americas segment is defintely the primary engine. It consistently accounts for around 77% to 79% of total revenue, and its margin performance is leading the company's profitability drive.

The significant change in AECOM's revenue profile is less about a product shift and more about a strategic focus on higher-margin consulting services. The company has been shedding lower-margin construction and government services businesses over the last few years. This is why you see a relatively flat total revenue number-even with a 1.5% TTM growth-while the NSR, which excludes those pass-through costs, is guided to grow organically by 5% to 8% for the full fiscal year 2025. That's a deliberate trade-off: less top-line growth for much better profitability and cash flow. You can dive deeper into the ownership structure in Exploring AECOM (ACM) Investor Profile: Who's Buying and Why?

Looking at the historical trend, the recent growth is a solid step up from prior years, even with the 2025 TTM number being low. Here is a quick look at the recent annual revenue growth rates:

The big 2024 jump shows the momentum they built, and while 2025 total revenue growth has moderated, the focus is now entirely on margin expansion and NSR. The company is simply choosing profit quality over revenue quantity. Finance: keep tracking NSR growth as the primary health metric, not just total revenue.

Profitability Metrics

You need to know if AECOM (ACM) is truly making money and whether those profits are sustainable. The short answer is yes, and the trend is excellent, but you have to look past the top-line revenue to see where the real value is created-in their high-margin consulting business, not the lower-margin construction work.

For the fiscal year 2025, our analysis, based on the latest available data, points to a successful pivot toward higher-margin work. Here's the quick math using the most recent trailing twelve months (TTM) revenue of approximately $16.07 billion and full-year estimates:

• Gross Profit Margin: Approximately 7.34% (based on TTM Gross Profit of $1.180 billion).
• Operating Profit Margin (Adjusted): Approximately 7.47% (based on the midpoint of Adjusted EBITDA guidance of $1.200 billion).
• Net Profit Margin (Estimated): Approximately 3.82% (based on estimated Net Income of $613.95 million).

What this estimate hides is that AECOM focuses on an internal metric, Net Service Revenue (NSR), which strips out pass-through revenue like subcontractor costs. That's why their segment adjusted operating margin is so high, a projected 16.5% for FY2025. That's the number that matters for their core design and consulting business.

Operational Efficiency and Margin Trends

The most compelling story here is the clear, multi-year trend of margin expansion. AECOM has successfully transitioned into an asset-light professional services firm, moving away from capital-intensive, lower-margin construction. This strategic shift is why their segment adjusted operating margin is projected to expand by 70 basis points to 16.5% for the full fiscal year 2025. It's a defintely a strong sign of effective cost management and a focus on high-value contracts.

Here is a snapshot of the margin improvement, which shows a commitment to operational efficiency (the full-year Adjusted EPS is also projected to grow from $2.09 in FY2020 to a midpoint of $5.25 in FY2025):

This is a significant jump in just five years. The company is getting more profit out of every dollar of its core service revenue, and that's a direct result of management's focus on winning high-value design and consulting projects.

Profitability vs. Industry Benchmarks

When you compare AECOM's profitability to the broader engineering and construction industry, the difference is stark. The average net profit margin for a typical US construction company hovers around 5% to 6% in 2025. AECOM's estimated net profit margin of 3.82% seems lower on the surface, but this is a classic apples-to-oranges comparison.

AECOM's true peer comparison lies in its adjusted margins on Net Service Revenue, which are considered industry-leading. General contractors often see gross margins between 12% and 16%, but AECOM's business model, which often passes through significant costs, results in a lower reported Gross Profit Margin of 7.34%. The key takeaway is that their segment adjusted operating margin of 16.5% is substantially higher than the operating margins of most traditional construction firms, confirming their successful positioning as a premium professional services provider. You can find a deeper analysis of this shift in Breaking Down AECOM (ACM) Financial Health: Key Insights for Investors.

So, while the net margin is thin, the core business's profitability (the 16.5% operating margin) is exceptional for the sector. That's where the investment thesis lives.

Debt vs. Equity Structure

You want to know if AECOM (ACM) is funding its growth with too much debt or if it's leaning on shareholder equity. The quick answer is that AECOM maintains a balanced, moderate debt load, which is a sign of a disciplined capital allocation strategy, but it is actively managing its maturity schedule.

As of the third quarter of fiscal year 2025, AECOM's long-term debt stood at about $2.456 billion. Short-term debt, which includes the current portion of long-term debt, was relatively small, totaling approximately $73.2 million ($4.7 million in short-term debt plus $68.5 million current portion of long-term debt). This composition shows the bulk of their borrowings are structured over longer periods, which is typical for a capital-light professional services firm that still needs to fund strategic initiatives and share repurchases.

Here's the quick math on their leverage:

• Debt-to-Equity Ratio: The ratio for the three months ending June 30, 2025, was 0.91.
• Net Leverage: The company ended Q3 2025 with a low net leverage ratio of 0.6x.

A debt-to-equity ratio of 0.91 means AECOM is using slightly less than a dollar of debt for every dollar of shareholder equity. To be fair, some analyses suggest a ratio of 1.22, which is notably higher than the industry average, indicating a heavier reliance on borrowed funds. But the low net leverage of 0.6x-which accounts for cash on hand-tells a more complete story: the debt is manageable and well-covered. The company is defintely prioritizing a strong balance sheet.

AECOM is continuously refining its debt structure. In July 2025, the company priced an offering of $1.2 billion in senior unsecured notes due in 2033. This was a smart move to refinance and retire its outstanding 5.125% Senior Notes due 2027, effectively pushing out a near-term maturity and managing its interest rate exposure. This kind of proactive debt management is what you want to see.

The company balances its growth between debt financing and equity funding through a disciplined capital allocation policy. They are using debt to fund strategic growth and their significant stock repurchase program-they have returned more than $2.7 billion in capital to shareholders (inclusive of dividends) since September 2020. The market recognizes this stability; S&P Global Ratings upgraded AECOM's issuer credit rating to 'BB+' (from 'BB') in late 2023, affirming a stable outlook, which is a good sign for their cost of borrowing. You can learn more about who is investing in the company in Exploring AECOM (ACM) Investor Profile: Who's Buying and Why?

Here is a snapshot of the key debt and equity figures:

Next step: Review the new 2033 senior notes' interest rate (6.0%) against their projected cash flow to ensure interest coverage remains robust.

Liquidity and Solvency

You need to know if AECOM (ACM) can cover its bills, especially in a tight credit market. The short answer is yes, they show strong, improving liquidity, but you still need to watch the working capital cycle. Their focus on high-margin design work has defintely improved their cash profile, which is the key takeaway for fiscal year 2025.

Current and Quick Ratio Analysis

AECOM's liquidity positions are solid, sitting comfortably above the 1.0 threshold that separates a solvent company from a potentially troubled one. For the end of fiscal year 2025, the Current Ratio is estimated at about 1.17. This ratio (current assets divided by current liabilities) shows they have $1.17 in liquid assets for every dollar of short-term debt.

The Quick Ratio (or acid-test ratio), which strips out inventory-a good move since inventory is harder to liquidate quickly-is estimated to be around 1.03 for the same period. This is a critical sign of health for a professional services firm, meaning their most liquid assets, like cash and receivables, are essentially equal to their immediate debts. That's a strong signal of near-term financial stability.

• Current Ratio (FY2025 Est.): 1.17
• Quick Ratio (FY2025 Est.): 1.03
• Both ratios are above 1.0, indicating strong short-term coverage.

Working Capital Trends and Management

Working capital, which is simply current assets minus current liabilities, is positive and trending in the right direction, supported by the rising current ratio. While the Current Ratio was 1.13 at the end of fiscal year 2024, the estimated increase to 1.17 by the end of fiscal year 2025 suggests better management of receivables and payables. For a service-based business like AECOM (ACM), working capital management is all about collecting cash from clients faster than they pay their vendors. Their success here is directly tied to the quality of their contracts and their operational efficiency.

The company's strategic shift toward higher-margin design and consulting services, as outlined in their Mission Statement, Vision, & Core Values of AECOM (ACM), inherently improves working capital efficiency because these services typically have lower capital expenditure and faster cash conversion cycles than large-scale construction projects.

Cash Flow Statements Overview

Cash flow is where the rubber meets the road. AECOM's cash generation is a major strength. For the full fiscal year 2024, the company reported $827.49 million in Cash Flow from Operating Activities, which is the lifeblood of the business. This strong operating cash flow allowed them to manage their other cash movements effectively.

In the first half of fiscal year 2025, the trend remains positive, with Operating Cash Flow reaching $191 million in the second quarter alone. More importantly, AECOM is guiding for a Free Cash Flow (FCF) conversion rate of 100%+ for the full fiscal year 2025. This means they expect to convert every dollar of net income into at least a dollar of free cash, which is a sign of exceptional earnings quality. Here's the quick math on their 2024 movements:

Potential Liquidity Strengths and Concerns

The primary strength is the robust cash generation and disciplined capital structure. The company's Net Leverage ratio (Net Debt to Adjusted EBITDA) was a very low 0.7x at the end of the second quarter of fiscal year 2025, down from 0.8x at the end of fiscal year 2024. This is a phenomenal number for an infrastructure firm, showing very low reliance on debt relative to earnings. A low net leverage ratio gives them flexibility to weather economic downturns, fund share repurchases, or pursue strategic acquisitions. Their record Free Cash Flow of $708 million in FY2024, which was up 20% year-over-year, provides a significant cushion.

The only minor concern is that a Current Ratio of 1.17 is not excessively high. It's healthy, but it leaves little room for a sudden, unexpected spike in current liabilities or a major delay in accounts receivable collection. Still, the underlying cash flow strength mitigates this ratio risk significantly. The strong balance sheet and cash flow mean liquidity is a non-issue right now.

Valuation Analysis

You're looking at AECOM (ACM) right now and asking the core question: is the market pricing this infrastructure giant correctly? The short answer is that, based on near-term earnings and a sector-specific valuation lens, AECOM looks fairly valued to slightly rich, but the consensus is still a strong buy, which suggests growth expectations are high.

Here's the quick math on why AECOM is trading at a premium to its historical averages, which you can see in the full analysis at Breaking Down AECOM (ACM) Financial Health: Key Insights for Investors. The company has executed a strong run, with the stock price up by over 18.54% to 24.87% over the last 12 months, trading around $133.52 as of mid-November 2025. That's a solid performance, especially given the 52-week range of $85.00 to $135.52. It's defintely not a cheap stock right now.

Is AECOM Overvalued or Undervalued?

When we look at the core valuation multiples, AECOM is trading at levels that reflect confidence in its consulting-led, high-margin business model, not just a cyclical construction rebound. The key is comparing its ratios to both the broader market and its direct peers in the Engineering & Construction sector.

• Price-to-Earnings (P/E) Ratio: The trailing twelve-month (TTM) P/E ratio sits between 26.47 and 29.09 as of November 2025. Looking forward, the 2025 estimated P/E is slightly lower, around 24.61 to 25.53. This is significantly higher than the median for many industrial sectors, suggesting investors are paying up for expected earnings growth.
• Price-to-Book (P/B) Ratio: This ratio is high, ranging from 6.99 (TTM) to 7.09. For a capital-light consulting business, a high P/B is common, but this level indicates that the market values AECOM's intangible assets-its brand, expertise, and contract backlog-at a substantial multiple of its accounting book value.
• Enterprise Value-to-EBITDA (EV/EBITDA): The TTM EV/EBITDA ratio is in the 15.3x to 16.01x range. This multiple is a better measure for capital-intensive industries and, while not extreme, it suggests the company is trading at a premium compared to its historical average and some peers.

The market is essentially telling you it believes AECOM can deliver on its growth strategy, especially with the tailwinds from global infrastructure spending. The valuation is stretched, but not wildly out of line for a high-quality, market-leading firm.

Dividend and Analyst Sentiment

AECOM's dividend profile is modest but stable, which is typical for a company focused on reinvesting for growth rather than maximizing shareholder distributions through yield. The annual dividend is currently $1.04 per share, resulting in a low dividend yield of about 0.78% to 0.8%. The payout ratio is very healthy, sitting between 21.01% and 22.6%, which means the dividend is well-covered by earnings and has room to grow.

Wall Street is overwhelmingly bullish. The analyst consensus is a clear 'Buy' or 'Strong Buy' from a group of 9 to 11 firms, with an average 12-month price target of approximately $137.30. This target implies a modest upside from the current price, which reinforces the idea that the stock is currently trading near its fair value, but the long-term trajectory remains positive.

Risk Factors

You're looking at AECOM (ACM) because the infrastructure megatrends-sustainability, resilience, and energy transition-are clearly powerful tailwinds. To be a realist, though, you have to map the near-term risks, even when the company is performing well. AECOM's financial health is strong, with a record backlog of $24,588 million as of Q3 fiscal year 2025, but a few key areas still warrant attention, especially around global market volatility and internal capital allocation.

The biggest external risk is the unevenness of global public spending. While the U.S. infrastructure momentum is robust, management has pointed to near-term budgetary constraints in key international markets like Australia and Asia. This has caused a temporary pause in larger transportation awards, which can weigh on Net Service Revenue (NSR) trends, even with a strong overall pipeline. Plus, as a global firm, AECOM is always exposed to geopolitical risks, tariff-related concerns, and foreign currency fluctuations. It's a global business, so volatility is just part of the deal.

Internally, the financial structure presents a mixed picture. While the company has done a great job managing its overall debt, showing a very low net leverage ratio of just 0.6x in Q3 2025, its debt-to-equity ratio is still high at 1.22 compared to the industry average. This reliance on borrowed funds signals a higher baseline financial risk. Also, the company's profitability metrics, while improving, lag peers; the net margin sits at only 3.13%, and the Return on Assets (ROA) is low at 1.09%. Here's the quick math: low ROA means they face hurdles in generating optimal returns from their asset base.

Operational and strategic risks are also evolving. You should watch two things: the cost of growth and the pace of digital transformation. AECOM expects business development expense to increase as a share of revenue in the fourth quarter of 2025 as they chase that record pipeline. The other risk analysts have raised is the potential for overinvestment in traditional technical centers versus a faster adoption of artificial intelligence (AI) automation. You need to see a clear return on those tech investments.

AECOM's mitigation strategy is focused and clear. They are doubling down on high-return, lower-risk advisory services, aiming to double that business to $400 million of NSR within three years. They are also leveraging a company-wide enterprise risk management framework to anticipate external threats, including environmental and social considerations, which is smart. This focus on high-margin work and a diversified portfolio is the defintely right move to buffer against international market softness and keep the Adjusted EBITDA guidance for FY 2025 on track at the midpoint of $1,200 million.

• External/Market: Near-term budgetary constraints in Australia and Asia.
• Financial/Internal: Debt-to-equity ratio is high at 1.22.
• Operational/Strategic: Rising business development costs in Q4 2025.

For a deeper dive into who is betting on AECOM's ability to navigate these risks, you should read Exploring AECOM (ACM) Investor Profile: Who's Buying and Why?

Next step: Check AECOM's Q4 2025 earnings report on November 17, 2025, to see if the increased business development expense actually paid off in new contract wins.

Growth Opportunities

You're looking for a clear map of where AECOM (ACM) is heading, and honestly, the path is paved with public spending and high-margin consulting work. The company has strategically pivoted to an asset-light model, focusing on advisory and program management, and that shift is paying off in their 2025 financial guidance. They've raised their full-year guidance for the third time this year, which is a strong signal of confidence.

The core of their future growth isn't just winning more bids; it's winning higher-value, more complex work that drives margin expansion. Here's the quick math: AECOM expects to deliver adjusted Earnings Per Share (EPS) between $5.20 and $5.30 for fiscal year 2025, which is a projected 16% increase at the midpoint. That's a significant jump, reflecting operational leverage and a focus on high-return organic growth investments.

The company's competitive advantage is defintely its technical expertise, which is why it was ranked the #1 overall design firm by Engineering News-Record (ENR). This reputation allows them to secure long-term, high-value contracts, which is visible in their record-high backlog.

• Backlog hit a record $24.588 billion as of Q3 2025.
• Organic Net Service Revenue (NSR) growth is projected at 5% to 8% for the full year.
• Segment Adjusted Operating Margin reached 17.1% in Q3 2025, exceeding the long-term target early.

What this estimate hides is the sheer scale of the secular investment megatrends they are tapping into. The US Infrastructure Investment and Jobs Act (IIJA) is a major tailwind, and less than 35% of its funds had been spent as of Q1 2025, leaving a huge runway. Plus, the global push for sustainability, resilience, and energy transition is creating entirely new markets.

Strategic Initiatives and Market Expansion

AECOM is actively building new growth platforms beyond traditional infrastructure. They are strategically targeting two high-growth advisory segments to become their next billion-dollar opportunities. The Advisory business, which grew at a double-digit pace in Q3 2025, is a key focus, with management aiming to double its NSR to $400 million within three years. They are also seeing massive traction in the Data Centers practice, which has doubled its NSR in the last two years and is expected to accelerate further.

Product innovation, for them, looks like digital transformation. They are integrating artificial intelligence (AI) into their delivery process, so much so that 60% to 70% of their bids and proposals now use AI for automation. This improves efficiency and allows their teams to focus on complex technical solutions, which is a clear competitive edge over peers like Jacobs Engineering.

Geographically, they are expanding their footprint in high-profile, future-focused projects globally, which boosts their brand and expertise:

If you want to dive deeper into the financial mechanics of this pivot, you can check out the full analysis on Breaking Down AECOM (ACM) Financial Health: Key Insights for Investors. Your next step should be to look at the Q4 2025 earnings report, expected soon, to confirm the analyst consensus of $1.34 Adjusted EPS and $4.3147 billion in revenue for the quarter. That will validate their full-year guidance and the strength of their record backlog conversion.