TSX:ARE

Stock Analysis Report

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Market Cap

CA$1.1b

Last Updated

2021/06/13 22:43 UTC

Data Sources

Company Financials +

Executive Summary

Aecon Group Inc., together with its subsidiaries, provide construction and infrastructure development services to private and public sector clients in Canada, the United States, and internationally. More Details


Snowflake Analysis

Very undervalued established dividend payer.


Similar Companies

Share Price & News

How has Aecon Group's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: ARE is less volatile than 75% of Canadian stocks over the past 3 months, typically moving +/- 2% a week.

Volatility Over Time: ARE's weekly volatility (2%) has been stable over the past year.


Market Performance


7 Day Return

0.9%

ARE

1.9%

CA Construction

0.4%

CA Market


1 Year Return

21.1%

ARE

55.5%

CA Construction

37.2%

CA Market

Return vs Industry: ARE underperformed the Canadian Construction industry which returned 55.5% over the past year.

Return vs Market: ARE underperformed the Canadian Market which returned 37.2% over the past year.


Shareholder returns

AREIndustryMarket
7 Day0.9%1.9%0.4%
30 Day0.1%0.05%3.4%
90 Day-7.2%12.9%5.5%
1 Year26.2%21.1%57.8%55.5%41.6%37.2%
3 Year30.1%16.8%19.5%14.2%32.5%20.0%
5 Year25.9%6.9%68.9%53.6%62.7%38.3%

Long-Term Price Volatility Vs. Market

How volatile is Aecon Group's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Aecon Group undervalued compared to its fair value and its price relative to the market?

29.9%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: ARE (CA$18.35) is trading below our estimate of fair value (CA$26.19)

Significantly Below Fair Value: ARE is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: ARE is good value based on its PE Ratio (13.6x) compared to the Canadian Construction industry average (44.4x).

PE vs Market: ARE is good value based on its PE Ratio (13.6x) compared to the Canadian market (15.2x).


Price to Earnings Growth Ratio

PEG Ratio: ARE is good value based on its PEG Ratio (0.7x)


Price to Book Ratio

PB vs Industry: ARE is good value based on its PB Ratio (1.3x) compared to the CA Construction industry average (3.8x).


Future Growth

How is Aecon Group forecast to perform in the next 1 to 3 years based on estimates from 11 analysts?

20.2%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: ARE's forecast earnings growth (20.2% per year) is above the savings rate (1.5%).

Earnings vs Market: ARE's earnings (20.2% per year) are forecast to grow faster than the Canadian market (13.5% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: ARE's revenue (1.3% per year) is forecast to grow slower than the Canadian market (5.7% per year).

High Growth Revenue: ARE's revenue (1.3% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: ARE's Return on Equity is forecast to be low in 3 years time (9.3%).


Past Performance

How has Aecon Group performed over the past 5 years?

10.5%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: ARE has a large one-off gain of CA$83.9M impacting its March 31 2021 financial results.

Growing Profit Margin: ARE's current net profit margins (2.2%) are higher than last year (2%).


Past Earnings Growth Analysis

Earnings Trend: ARE's earnings have grown by 10.5% per year over the past 5 years.

Accelerating Growth: ARE's earnings growth over the past year (13.7%) exceeds its 5-year average (10.5% per year).

Earnings vs Industry: ARE earnings growth over the past year (13.7%) underperformed the Construction industry 20.7%.


Return on Equity

High ROE: ARE's Return on Equity (9.5%) is considered low.


Financial Health

How is Aecon Group's financial position?


Financial Position Analysis

Short Term Liabilities: ARE's short term assets (CA$2.1B) exceed its short term liabilities (CA$1.4B).

Long Term Liabilities: ARE's short term assets (CA$2.1B) exceed its long term liabilities (CA$864.3M).


Debt to Equity History and Analysis

Debt Level: ARE's debt to equity ratio (65.9%) is considered high.

Reducing Debt: ARE's debt to equity ratio has increased from 48.4% to 65.9% over the past 5 years.

Debt Coverage: ARE's debt is well covered by operating cash flow (43.3%).

Interest Coverage: ARE's interest payments on its debt are not well covered by EBIT (1.6x coverage).


Balance Sheet


Dividend

What is Aecon Group current dividend yield, its reliability and sustainability?

3.81%

Current Dividend Yield


Upcoming Dividend Payment

TodayJun 14 2021Ex Dividend DateJun 24 2021Dividend Pay DateJul 05 202111 days from Ex DividendBuy in the next 9 days to receive the upcoming dividend

Dividend Yield vs Market

Notable Dividend: ARE's dividend (3.81%) is higher than the bottom 25% of dividend payers in the Canadian market (1.53%).

High Dividend: ARE's dividend (3.81%) is low compared to the top 25% of dividend payers in the Canadian market (4.45%).


Stability and Growth of Payments

Stable Dividend: ARE's dividends per share have been stable in the past 10 years.

Growing Dividend: ARE's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (48.5%), ARE's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: ARE's dividends in 3 years are forecast to be covered by earnings (58% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

4.5yrs

Average management tenure


CEO

Jean-Louis Servranckx (59 yo)

2.75yrs

Tenure

CA$4,872,332

Compensation

Mr. Jean-Louis Servranckx has been President and Chief Executive Officer of Aecon Group Inc. since September 4, 2018 and serves as its Director since October 25, 2018. He has years of experience in the con...


CEO Compensation Analysis

Compensation vs Market: Jean-Louis's total compensation ($USD4.01M) is above average for companies of similar size in the Canadian market ($USD1.18M).

Compensation vs Earnings: Jean-Louis's compensation has been consistent with company performance over the past year.


Leadership Team

Experienced Management: ARE's management team is considered experienced (4.5 years average tenure).


Board Members

Experienced Board: ARE's board of directors are not considered experienced ( 2.8 years average tenure), which suggests a new board.


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Aecon Group Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Aecon Group Inc.
  • Ticker: ARE
  • Exchange: TSX
  • Founded: 1877
  • Industry: Construction and Engineering
  • Sector: Capital Goods
  • Market Cap: CA$1.107b
  • Shares outstanding: 60.32m
  • Website: https://www.aecon.com

Number of Employees


Location

  • Aecon Group Inc.
  • 20 Carlson Court
  • Suite 105
  • Toronto
  • Ontario
  • M9W 7K6
  • Canada

Listings


Biography

Aecon Group Inc., together with its subsidiaries, provide construction and infrastructure development services to private and public sector clients in Canada, the United States, and internationally. It ope...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2021/06/13 22:43
End of Day Share Price2021/06/11 00:00
Earnings2021/03/31
Annual Earnings2020/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.