Nuclear Projects And Infrastructure Will Shape Trends Despite Execution Risks

Key Takeaways

• Surging demand in nuclear and infrastructure markets, supported by government policies and technology leadership, drives strong backlog growth and recurring revenue opportunities.
  
• Strategic shift toward high-value services and disciplined capital allocation is expanding margins and positioning the company for sustained, outsized growth across core end markets.
  
• Revenue and earnings growth face significant risks from project delays, reliance on nuclear contracts, acquisition integration challenges, and persistent margin volatility in key markets.

Catalysts

Provides professional services and project management, and capital investment services in United Kingdom, Canada, the United States, Saudi Arabia, and internationally.

• Record backlog growth, especially in Nuclear (backlog up 223% YoY to $5.6B), reflects surging demand as global energy transition and decarbonization accelerate; this large contracted pipeline is likely to drive sustained revenue and EBITDA growth for several years.
  
• Strategic capital allocation-industry-leading balance sheet, recent debt paydown, and clear priority on reinvesting in organic and bolt-on M&A-positions AtkinsRéalis to capture outsized revenue growth in expanding end markets (transport, water, renewables, power) as infrastructure spending increases globally.
  
• Margin expansion is materializing as the company pivots away from lower-margin fixed-price construction, with high-value services (engineering, advisory, project management) now driving segment adjusted EBITDA margin increases (e.g., 16% in Engineering Services, 25% in Nuclear), supporting improved long-term profitability and net margins.
  
• Government policy tailwinds and announced multi-year public infrastructure commitments in core markets (e.g., $1.3T UK infrastructure plan, Canadian infrastructure investments, U.S. Department of Transportation contracts) underpin predictable and recurring revenue streams ahead as infrastructure renewal and urbanization trends persist.
  
• Acceleration of nuclear new build and life extension projects-underpinned by AtkinsRéalis' technology leadership and strategic partnerships (EDF, SMR projects)-creates a multi-year growth opportunity, directly supporting both top-line revenue and recurring earnings, placing the company at the center of the global shift toward resilient, low-carbon energy infrastructure.

AtkinsRéalis Group Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming AtkinsRéalis Group's revenue will grow by 7.4% annually over the next 3 years.
• Analysts assume that profit margins will shrink from 24.7% today to 7.0% in 3 years time.
• Analysts expect earnings to reach CA$896.4 million (and earnings per share of CA$5.33) by about August 2028, down from CA$2.5 billion today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 21.3x on those 2028 earnings, up from 6.3x today. This future PE is lower than the current PE for the CA Construction industry at 34.4x.
• Analysts expect the number of shares outstanding to decline by 5.39% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.4%, as per the Simply Wall St company report.

AtkinsRéalis Group Future Earnings Per Share Growth

Risks

• Lowered 2025 organic revenue growth outlook in key Engineering Services Regions (USLA and EMEA), as a result of project delays, contract terminations, and reprioritization of major programs (e.g., in Saudi Arabia and EMEA), increases risk of slower long-term revenue growth than previously targeted.
  
• Organic revenue contraction in core U.S. and EMEA geographies-despite short-term optimism-signals potential structural demand fluctuations and exposes the business to ongoing economic volatility, which could weigh on future revenue and profitability.
  
• Execution risk surrounding the company's aggressive bolt-on and tuck-in acquisition strategy, including integration challenges and potential overpayment, could result in unexpected write-downs or impairment charges that negatively affect earnings and capital allocation effectiveness.
  
• Heavy reliance on nuclear segment growth and large, lumpy CANDU/new build contracts introduces revenue concentration risk; failure to secure new nuclear build or life-extension wins, or regulatory/capacity bottlenecks, could materially impair medium
• and long-term revenue and earning streams.
  
• Persistent historic issues in fixed-price/LSTK and lower-margin segments, as well as exposure to project delays, volatile government funding, and cost overruns, may continue to constrain margin expansion and lead to earnings volatility, hindering sustainable improvements in net margins.

Valuation

• The analysts have a consensus price target of CA$110.0 for AtkinsRéalis Group based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CA$124.0, and the most bearish reporting a price target of just CA$95.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be CA$12.8 billion, earnings will come to CA$896.4 million, and it would be trading on a PE ratio of 21.3x, assuming you use a discount rate of 7.4%.
  
• Given the current share price of CA$96.51, the analyst price target of CA$110.0 is 12.3% higher. Despite analysts expecting the underlying buisness to decline, they seem to believe it's more valuable than what the market thinks.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.