AECOM is a global engineering and infrastructure services firm that provides design, construction and consulting services, and its recent financial profile is marked by recovering profitability, elevated earnings volatility, and active cash deployment.
The company’s profitability has improved: gross margin rose to 7.5% and operating margin to 6.6% in the most recent reported period (2025-09-30), and reported net margin reached 4.4% (period end 2025-03-31). Return on equity strengthened to 18.4% (period end 2024-09-30), reflecting higher trailing net income, and diluted EPS has recovered materially to $5.38 (most recent observed $5.38 at 2025-06-30) after prior troughs. Historical cash-quality metrics in the dataset show operating cash flow exceeding net income by roughly 1.57x (operating CF TTM $814.2M versus net income TTM $709.4M), indicating periods where earnings were well supported by cash generation.
There are meaningful areas of concern. Top-line momentum is muted: revenue per share growth has essentially flattened to 0.2% year‑over‑year (period end 2025-09-30) and quarterly revenues have clustered in the $3.7–4.2B range recently (most recent quarter $3.80B). Net income on a quarterly basis has trended downward over the last year, falling from $268.0M (2024-09-30) to $131.0M (2025-06-30). Capital deployment has also increased cash outflows: investing cash flow (TTM) moved to -$413.2M (2025-09-30) from -$138.2M (2023-09-30), and financing cash flow (TTM) increased outflows to -$403.7M (2025-09-30) versus -$295.5M (2024-09-30). Earnings and EPS have been volatile—YoY EPS growth swung from -82.2% to +627.0% in recent reported periods—underscoring uneven underlying performance.
The foundation of business quality and long-term value creation
AECOM's recent revenue pattern shows quarterly receipts clustered between about $3.7B and $4.2B over the past year, with revenue of $4.18B reported in both and , then declining to $3.80B in the quarter ended . The series includes several earlier large spikes — for example $8.26B on , $6.69B on and $20.17B on — that stand out from the more recent, steadier 3.7–4.2B range.
Net income has been positive in the most recent reported quarters but has trended lower over the last year: $268.0M on , $167.0M on , $143.4M on and $131.0M on . The most recent quarterly revenue was $3.80B (). The most recent reported net income was $131.0M ().
Why Growth Matters
Consistent revenue and earnings growth are the lifeblood of successful long-term investments. Companies that can grow their top line (revenue) and bottom line (net income) over many years demonstrate they have products or services customers value and are willing to pay for repeatedly.
Revenue Growth shows whether the company is expanding its market reach, gaining market share, or successfully launching new products.Net Income Growth demonstrates the company can convert that revenue into actual profits while managing costs effectively.
Look for steady, sustainable growth rather than erratic spikes. The best businesses compound earnings year after year, creating tremendous value for shareholders over time. Companies that can grow earnings faster than revenue are improving their profitability—a sign of operational excellence and competitive strength.
Year-over-year growth rates for revenue and earnings per share
Reading the Growth Rate Chart
This chart converts the absolute per-share figures into year-over-year percentage changes, making it easy to see whether growth is accelerating, decelerating, or reverting to trend — regardless of the company's absolute size.
Revenue per Share Growth (1-year, split-adjusted) measures how quickly the top line is expanding on a per-share basis. Sustained positive growth signals that the company continues to win customers and grow its addressable market.EPS Diluted Growth (1-year, split-adjusted) measures how quickly earnings are compounding for each shareholder. When EPS growth consistently outpaces revenue growth, operating leverage and margin expansion are at work.
Look for consistency, not just magnitude. A company that reliably grows EPS 10–15% per year is far more valuable than one that alternates between 50% spikes and deep contractions. Negative EPS growth during a period of positive revenue growth is a red flag — costs are rising faster than sales. Quarters where both lines converge near zero or go negative deserve close scrutiny.
How revenue converts to net income for the most recent annual period
Over the period Oct 2024 to Sep 2025, Aecom converts approximately 8¢ of every revenue dollar into gross profit (gross margin: 7.5%).The waterfall below shows how revenue flows through various expense categories.
Period Information
Report Type: Annual (10-K)
Period: Oct 2024 to Sep 2025
Analyzing long-term margin stability and competitive positioning
AECOM's gross and operating margins have shown steady improvement in the most recent quarters. Gross margin rose from 6.7% at 2024-09-30 to 6.8% at 2024-12-31, 7.1% at 2025-03-31, and 7.5% at 2025-09-30. Operating margin was 5.7% at 2024-09-30 and increased to 6.6% by 2025-09-30. Reported net margin increased from 2.5% at 2024-09-30 to 4.4% at 2025-03-31.
Over the longer term, gross margin moved up from mid-single digits in the early 2010s, dipped to low single digits in parts of the mid-2010s, and has been above approximately 6% since 2022. Operating margin recovered from near-zero in 2019 to consistent mid-single-digit levels by 2022–2025, while net margin has been more variable historically, including negative readings in 2015 and 2019 before returning to positive territory. The most recent gross margin was 7.5% (period end 2025-09-30), the most recent operating margin was 6.6% (period end 2025-09-30), and the most recent net profit margin was 4.4% (period end 2025-03-31).
Understanding Profit Margins
Between Oct 2024 and Sep 2025, Aecom converts every dollar of revenue through the following stages:
Sustainable competitive advantages reveal themselves through consistently superior profit margins over extended periods. Companies with durable economic moats maintain pricing power and operational efficiency that competitors struggle to match.
A sign of durable competitive advantage is earning sustained higher margins than competitors.Look for margins that remain stable or improve over time, especially during economic downturns. Declining margins may signal increasing competition, pricing pressure, or deteriorating business fundamentals.
Comparing reported earnings to actual cash generation
AECOM's trailing twelve‑month net income shows a pronounced upward trend in the most recent reporting periods. Net income rose from $55.3M at 2023‑09‑30 to $402.3M at 2024‑09‑30 and then to $712.7M at 2025‑03‑31, holding near that level at $709.4M at 2025‑06‑30. This recent run-up follows earlier volatility, including negative TTM net income in 2019‑2020 and smaller positive amounts in intervening years.
Operating cash flow (TTM) values in the provided dataset are materially older than the recent net income series; the latest operating cash flow observation here is $814.2M at 2016‑09‑30, with earlier TTM cash flow points of $661.3M (2015‑06‑30), $587.2M (2015‑03‑31) and $360.6M (2014‑09‑30). Because the dataset’s operating cash flow entries do not overlap the 2023–2025 net income observations, direct contemporaneous comparison between recent net income and operating cash flow cannot be made from the data shown.
The most recent Net Income (TTM) observed was $709.4M (period end 2025‑06‑30). The most recent Operating Cash Flow (TTM) in the dataset was $814.2M (period end 2016‑09‑30).
The Earnings vs. Cash Flow Gap
Reported earnings (Net Income) doesn't always reflect actual cash generation. Companies use accrual accounting, which recognizes revenue when earned and expenses when incurred—not when cash actually changes hands. This creates timing differences and opportunities for accounting discretion that can mask underlying business health.
Net Income (the "earnings" number) can be influenced by non-cash items like depreciation, stock-based compensation, and changes in accounting estimates.Operating Cash Flow, however, shows the actual cash the business generates from its core operations—a harder number to manipulate.
Trailing Twelve Months
What to Look For
Key Insight: Companies with durable competitive advantages typically show operating cash flow that meets or exceeds net income over time, demonstrating they convert accounting profits into actual cash that can be returned to shareholders or reinvested in the business.
Measuring management's efficiency at generating profits from shareholder capital
AECOM's return on equity has strengthened notably in the most recent period. After a 12.5% at 2022-09-30, the metric rose to 18.4% by 2024-09-30, an increase of 5.9 percentage points, reflecting higher trailing twelve‑month net income relative to average equity in the latest reported quarter.
Looking further back, ROE swung negative in 2019 and 2020 (−6.7% and −5.7%), recovered to 6.4% in 2021, and then climbed through 2022 to the current level. The 18.4% reading at 2024-09-30 is the highest value in the provided history. The most recent quarterly Return on Equity was 18.4%.
The Gold Standard of Profitability
Return on Equity (ROE) is a powerful measure of how effectively a company's management is using the money shareholders have invested. Calculated by dividing Net Income by Shareholders' Equity, it reveals how much profit is generated for every dollar of equity capital.
A consistently high ROE (typically above 15-20%) is often the signature of a "quality" business with a durable competitive advantage. It indicates that the company can generate high returns on its own capital, which it can then reinvest at these high rates to compound value over time.
What to Look For:
How the company generates and deploys its cash
In the trailing twelve months ending 2025-09-30, AECOM shows larger net outflows in both investing and financing activities. Investing cash flow (TTM) moved to -$413.2M at 2025-09-30 from -$138.2M at 2023-09-30, reflecting a steeper net cash use for investing over the interval. Financing cash flow (TTM) increased its net outflow to -$403.7M at 2025-09-30 versus -$295.5M at 2024-09-30, showing a larger cash use in financing in the most recent TTM compared with the prior year TTM.
Operating cash flow (TTM) is not reported in recent periods in the provided dataset; the latest operating CF TTM available here is $814.2M at period end 2016-09-30. The most recent observed values in the dataset are:
Understanding Company Strategy
Capital allocation refers to how management decides to spend and invest the company's cash. Analyzing the three primary categories of cash flow reveals a company's true operational strategy:
What to look for: Is the company bootstrapping (funding growth solely from operating cash)? Are they borrowing to fund aggressive expansion or dividends? Or are they capital raising by issuing new shares, potentially diluting your ownership? A healthy, mature company typically generates strong operating cash, moderately invests in growth, and returns the surplus to shareholders through financing activities.
Trailing Twelve Months
Net assets attributable to each share — the accounting floor of intrinsic value
Why Book Value per Share Matters
Book value per share is the net worth of the company — total assets minus total liabilities — divided by shares outstanding (split-adjusted). It represents the theoretical liquidation value per share if every asset were sold and every liability repaid at balance-sheet carrying values. It is the accounting foundation upon which much of equity valuation is built.
A steadily rising book value per share is one of the most reliable signals of compounding wealth creation. It means the company is retaining earnings and building net worth faster than it is returning capital or eroding it. Warren Buffett famously tracked Berkshire Hathaway's book value per share for decades as his primary measure of intrinsic value growth.
Context is essential. Asset-heavy businesses (banks, manufacturers, utilities) should be judged by book value more directly than asset-light businesses (software, consumer brands), where intangible assets like intellectual property and customer loyalty may far exceed their balance-sheet carrying values. A company trading at a large premium to book value is not necessarily overvalued — it may simply possess competitive advantages that accounting rules do not capture. Conversely, a declining book value per share — especially over multiple years — is a serious warning sign of capital destruction.
How much of the company is financed by debt versus shareholders' equity
Reading the Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio compares total financial debt to shareholders' equity. A ratio of 1.0 means the company has borrowed one dollar for every dollar of equity; a ratio of 2.0 means it has borrowed twice as much as it owns. Financial leverage amplifies both returns and risk: in good times, debt turbocharges equity returns; in bad times, it accelerates losses and can threaten solvency.
Trends matter more than a single number. A rising D/E ratio can mean the company is taking on debt to fund growth — potentially value-creating if returns exceed the cost of capital. But it can also mean equity is being eroded through losses or that the business is borrowing simply to sustain operations. A falling D/E ratio generally reflects strengthening financial health: earnings are being retained, debt maturities are being paid down, or both.
Industry norms vary enormously. Capital-intensive sectors (utilities, real estate, financials) routinely carry high D/E ratios that would be alarming in, say, a technology company. Always compare against sector peers. As a rough rule of thumb, a D/E above 2× in a cyclical business warrants careful scrutiny of interest coverage and refinancing risk.
Short-term liquidity — can the company cover its near-term obligations?
Liquidity: Can the Business Pay Its Bills?
The current ratio is calculated as current assets divided by current liabilities. A ratio of 1.5 means the company has $1.50 of short-term assets — cash, receivables, inventory — for every $1.00 of obligations due within the next twelve months. It is the most direct measure of near-term financial resilience: can the business meet its obligations without needing to raise new capital or sell long-term assets at a discount?
A ratio above 1.0 is generally healthy, meaning current assets exceed current liabilities. A ratio consistently above 2.0 may indicate the company is holding excess cash or inventory that could be deployed more productively. A ratio below 1.0 is a warning sign — the company is relying on future cash generation or external financing to cover its near-term obligations, which is manageable in normal conditions but dangerous during a downturn.
Trends and context matter.A declining current ratio isn't always alarming — highly efficient businesses (e.g., large retailers with reliable daily cash flows) often run leaner balance sheets intentionally. Conversely, a rapidly rising current ratio can signal slowing sales causing inventory to build, or customers taking longer to pay. Always compare the trend against industry peers and cross-reference with the cash flow statement to assess whether the business is genuinely liquid or just holding non-cash current assets.
How much the market is paying for each dollar of company earnings
Over the most recent four reported quarters, AECOM's trailing twelve-month P/E fell from 33.9x on 2024-09-30 to 17.2x on 2025-03-31, then rose to 21.0x on 2025-06-30. This recent movement follows a pronounced spike to 193.3x at 2023-09-30, after which the ratio contracted substantially over the subsequent year.
Earlier readings show variability — for example, 48.1x on 2021-09-30 and 31.7x on 2018-09-30 — and a few quarters have no reported P/E (2020-09-30, 2019-09-30, 2015-09-30). The most recent Price-to-Earnings ratio was 21.0x.
What Is the PE Ratio?
The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics in investing. It divides the current stock price by the company's earnings per share (EPS), revealing how much investors are willing to pay for each dollar of earnings. A high PE can signal that the market expects strong future growth, while a low PE may suggest undervaluation—or reflect genuine concerns about the company's prospects.
Context matters:PE ratios vary significantly across industries. High-growth technology companies routinely trade at PE ratios above 30x or 40x, while mature, low-growth sectors like utilities or financials often trade closer to 10–15x. Always compare a company's PE to its own history and its industry peers, not just an absolute number.
What to Look For:
Key Insight:The PE ratio is a snapshot of market sentiment and expectations. Tracking it over time alongside earnings trends reveals whether the market's valuation has expanded or contracted—and whether that change is justified by fundamentals.