Last week, Aecon Group Inc. (TSX:ARE) shares soared as the company reported another record quarter. The stock is 94% higher than its 2025 low and more than 200% higher than three years ago. This, while demand continues to rise and the backlog stands at $10.8 billion, is the highest level ever for us.
In this article, I will highlight why it is not too late to buy Aecon shares, despite its strong performance in recent years.
Record results
Aecon’s recent third-quarter results were filled with positive buying signals and bullish trends. Simply put, infrastructure spending is exploding. The nuclear sector, for example, is growing, driven by renewed interest in the clean properties of nuclear energy. This results in higher expenditure on new factories and renovations.
Other sectors with strong volumes include the utilities and gas distribution sectors. This growth is driven by the fact that more than 40% of utility infrastructure is reaching the end of its life. It is also driven by the demand of electrification, artificial intelligence (AI) factories and data centers. Adapting and expanding the infrastructure to meet this demand is essential.
As a result, Aecon’s third quarter revenue reached $1.5 billion, 20% higher than the same period last year. And of course, the backlog is at a record $10.8 billion.
Aecon’s prospects
The company has a diversified mix of projects by geography, sector, contract size and type. See the graph below for the distribution of Aecon’s turnover over the last quarter.
With Aecon we have a stock that benefits from strong, long-term growth trends across a diversified range of sectors. According to management, the company’s pipeline in Canada is strong, with just over $100 billion expected in projects over the next five years. Aecon will of course not receive all this work, but it is a preferred contractor with a leading and growing position in the sector.
Looking ahead, we can also expect Aecon to continue to benefit from growing nuclear projects in the US. In fact, Aecon is expanding its capacity in the US nuclear sector and is now located in 15 states, employing more than 1,300 people.
Attractive valuation
Looking at Aecon’s valuation, we can see that the stock is still trading at very reasonable levels: 18 times next year’s earnings and 14 times 2027 consensus earnings. Given the long-term growth prospects of the company’s business, I would say this valuation is more than reasonable, with plenty of upside potential.
The bottom line
Infrastructure spending is expected to remain strong in the medium to long term. The growth engines are in place, from aging infrastructure to new industries and changing energy sources. In short, Aecon stock still has a lot of upside potential as it continues to benefit from these trends. And as a bonus, Aecon shares currently yield 2.6%
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