TSX:ARE

Stock Analysis Report

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Executive Summary

Aecon Group Inc. and 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

Undervalued with excellent balance sheet and pays a dividend.


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 +/- 3% a week.

Volatility Over Time: ARE's weekly volatility (3%) has been stable over the past year.


Market Performance


7 Day Return

2.7%

ARE

3.1%

CA Construction

0.7%

CA Market


1 Year Return

-11.9%

ARE

4.5%

CA Construction

-2.0%

CA Market

Return vs Industry: ARE underperformed the Canadian Construction industry which returned 5% over the past year.

Return vs Market: ARE underperformed the Canadian Market which returned -1.8% over the past year.


Shareholder returns

AREIndustryMarket
7 Day2.7%3.1%0.7%
30 Day13.5%4.9%5.3%
90 Day9.1%4.2%4.0%
1 Year-8.1%-11.9%6.3%4.5%1.6%-2.0%
3 Year-8.6%-17.4%-4.1%-9.0%10.2%-0.5%
5 Year33.9%14.3%28.9%15.8%44.5%22.3%

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?

24.4%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: ARE (CA$15.97) is trading below our estimate of fair value (CA$21.33)

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 (12.6x) compared to the CA Construction industry average (23.2x).

PE vs Market: ARE is good value based on its PE Ratio (12.6x) compared to the Canadian market (15x).


Price to Earnings Growth Ratio

PEG Ratio: ARE's earnings are forecast to decline next year, so we can't calculate its PEG ratio.


Price to Book Ratio

PB vs Industry: ARE is good value based on its PB Ratio (1.1x) compared to the CA Construction industry average (1.9x).


Next Steps

Future Growth

How is Aecon Group forecast to perform in the next 1 to 3 years based on estimates from 12 analysts?

-1.8%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: ARE's earnings are forecast to decline over the next 3 years (-1.8% per year).

Earnings vs Market: ARE's earnings are forecast to decline over the next 3 years (-1.8% per year).

High Growth Earnings: ARE's earnings are forecast to decline over the next 3 years.

Revenue vs Market: ARE's revenue (6.1% per year) is forecast to grow slower than the Canadian market (6.1% per year).

High Growth Revenue: ARE's revenue (6.1% 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 (7.4%).


Next Steps

Past Performance

How has Aecon Group performed over the past 5 years?

5.4%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: ARE has high quality earnings.

Growing Profit Margin: ARE's current net profit margins (2.2%) are lower than last year (2.3%).


Past Earnings Growth Analysis

Earnings Trend: ARE's earnings have grown by 5.4% per year over the past 5 years.

Accelerating Growth: ARE's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: ARE had negative earnings growth (-5.2%) over the past year, making it difficult to compare to the Construction industry average (-14.4%).


Return on Equity

High ROE: ARE's Return on Equity (8.8%) is considered low.


Next Steps

Financial Health

How is Aecon Group's financial position?


Financial Position Analysis

Short Term Liabilities: ARE's short term assets (CA$2.3B) exceed its short term liabilities (CA$1.6B).

Long Term Liabilities: ARE's short term assets (CA$2.3B) exceed its long term liabilities (CA$916.9M).


Debt to Equity History and Analysis

Debt Level: ARE's debt to equity ratio (67.1%) is considered high.

Reducing Debt: ARE's debt to equity ratio has reduced from 78.2% to 67.1% over the past 5 years.

Debt Coverage: ARE's debt is well covered by operating cash flow (57.8%).

Interest Coverage: ARE's interest payments on its debt are well covered by EBIT (4.6x coverage).


Balance Sheet


Next Steps

Dividend

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

3.96%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: ARE's dividend (4.01%) is higher than the bottom 25% of dividend payers in the Canadian market (1.66%).

High Dividend: ARE's dividend (4.01%) is low compared to the top 25% of dividend payers in the Canadian market (5.45%).


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 (49.4%), 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 well covered by earnings (44.2% payout ratio).


Next Steps

Management

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

3.9yrs

Average management tenure


CEO

Jean-Louis Servranckx (59 yo)

2.17yrs

Tenure

CA$4,285,982

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.


CEO Compensation Analysis

Compensation vs Market: Jean-Louis's total compensation ($USD3.28M) is above average for companies of similar size in the Canadian market ($USD1.48M).

Compensation vs Earnings: Jean-Louis's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Jean-Louis Servranckx
President2.17yrsCA$4.29m0.013%
CA$ 122.6k
David Smales
Executive VP & CFO11yrsCA$2.30m0.039%
CA$ 377.6k
Yonni Fushman
Executive VP3.33yrsCA$1.56m0.0036%
CA$ 34.6k
Mark Scherer
Executive VP of Industrial & Chief Safety Officer5.17yrsCA$1.32mno data
Adam Borgatti
Senior Vice President of Corporate Development & Investor Relations2.83yrsno data0.0038%
CA$ 37.0k
Gordana Terkalas
Senior Vice President of Human Resources2.42yrsno datano data
Steven Nackan
Executive VP & President of Concessions1.83yrsCA$1.58mno data
Mathew Kattapuram
Senior Vice President of Strategic Business Development8.83yrsCA$696.64kno data
John Singleton
Senior Vice President of Industrial East & West9.83yrsno datano data
Alistair MacCallum
Senior Vice President of Financeno datano data0.0031%
CA$ 30.2k
Blair Brandon
Senior Vice President of Major Projects - Civil West3.92yrsno datano data
Michael Derksen
Senior VP & Executive Lead of Civil West3.92yrsno datano data

3.9yrs

Average Tenure

Experienced Management: ARE's management team is considered experienced (3.9 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Jean-Louis Servranckx
President2.17yrsCA$4.29m0.013%
CA$ 122.6k
Monica Sloan
Independent Director7.42yrsCA$211.15k0.013%
CA$ 129.4k
Anthony Franceschini
Independent Lead Director0.83yrCA$233.94k0.15%
CA$ 1.5m
Eric Rosenfeld
Independent Director3.42yrsCA$208.15kno data
John Beck
Non-Executive Chairman2.17yrsCA$4.16mno data
James Hole
Independent Director11.58yrsCA$222.15k1.09%
CA$ 10.5m
Susan Jenah
Independent Director4.42yrsCA$232.65k0.0035%
CA$ 34.3k
John Brace
Independent Director1.42yrsCA$168.15k0.0045%
CA$ 43.7k
Joseph Carrabba
Independent Corporate Director7.33yrsCA$269.77k0.017%
CA$ 161.7k
Deborah Stein
Independent Director1.42yrsCA$172.25k0.0049%
CA$ 47.8k

2.8yrs

Average Tenure

65yo

Average Age

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$968.224m
  • Shares outstanding: 59.88m
  • Website: https://www.aecon.com

Number of Employees


Location

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

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
ARETSX (The Toronto Stock Exchange)YesCommon SharesCACADJan 1988
2AEDB (Deutsche Boerse AG)YesCommon SharesDEEURJan 1988
AEGX.FOTCPK (Pink Sheets LLC)YesCommon SharesUSUSDJan 1988

Biography

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


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/11/23 23:37
End of Day Share Price2020/11/23 00:00
Earnings2020/09/30
Annual Earnings2019/12/31


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.