AECOM: Priced for a Slowdown That Isn't in the Backlog
AECOM ($ACM) is down about 30% YTD and 41% in the past twelve months. It just posted a record backlog, raised guidance for the second straight quarter, and saw three named executives all buy stock in the same window. The main number that scared people (Q2 cash flow) had already recovered by the time the filing went public.
AECOM is currently trading at $67.70; just a year ago it was $115. The company has given back ~40% of its value while its backlog, margins, and earnings have all set records. The market is pricing ACM as though the business is deteriorating, but the filings say the opposite. The people who run the company put their own money on that difference in May.
What AECOM Actually Does
AECOM sells engineering and consulting hours. It designs transportation networks, water systems, environmental remediation, energy and grid projects, and buildings. It then manages the programmes that deliver them. It is not a builder; the company exited self-perform construction years ago. It kept the design fees and shed the fixed-price construction risk that used to sink its margins. What's left is a capital-light professional-services business with a Fortune 500 footprint and $16.1B of revenue in FY2025.
The business reports across three lines: Americas, International, and AECOM Capital. The moat is scale and the relationships it has built. Governments award multi-year framework contracts to a short list of firms that can staff work across an entire country, and AECOM is on most of those lists. That produces a backlog (the value of work already won but not yet delivered), which gives revenue visibility that a project-by-project firm never has. The key metric to watch with this type of business is book-to-burn (wins divided by revenue recognised in the period); above 1 means the backlog is growing faster than the company is working it off.
The Q2 2026 Numbers
AECOM reported its Q2 results on 11 May 2026, it was a record on almost every operating line.
Revenue rose 1% to $3.8B, on a GAAP basis operating income fell 4% to $248M, but net income rose 19% to $184M and diluted EPS rose 22% to $1.42. On an adjusted basis, EPS rose 27% to $1.59, and EBITDA rose 8% to $312M. The segment adjusted operating margin reached 16.5%, +50 basis points, and a second-quarter record. In the Americas, the design business grew net service revenue 8%, and the Americas segment posted a record 20.0% adjusted margin on net service revenue.
The backlog is the headline. Total backlog grew 8% to a record $26.2B, driven by a 1.2 book-to-burn in the design business. That was the 22nd consecutive quarter above 1. The design pipeline reached a record and grew double digits. The international backlog grew 25% YoY.
The balance sheet holds up: cash of about $802M, net leverage of 1.2x, and a share count down to roughly 128M from buybacks. On the back of all this, AECOM raised FY guidance for the second straight quarter to an adjusted EPS of $5.90 to $6.10 (14% growth at the midpoint), with free cash flow of about $400M. The longer-term targets are a 20%+ margin exit rate by 2028 and 15%+ EPS growth a year through 2029.
The Cash Flow Line Everyone Saw
Here is the number that did the damage. Second-quarter operating cash flow was $4M, down 98%, and free cash flow was negative $27M. The stock fell 12% the next day. Read alone, it looks like a company that has stopped generating cash.