AECON GROUP INC (ARE.CA) Stock Fundamental Analysis
Canada - Toronto Stock Exchange - TSX:ARE - CA00762V1094 - Common Stock
33.74 CAD
-0.14 (-0.41%)
Taking everything into account, ARE scores 3 out of 10 in our fundamental rating. ARE was compared to 8 industry peers in the Construction & Engineering industry. ARE may be in some trouble as it scores bad on both profitability and health. While showing a medium growth rate, ARE is valued expensive at the moment. Finally ARE also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
- In the past year ARE was profitable.
- ARE had a negative operating cash flow in the past year.
- Of the past 5 years ARE 4 years were profitable.
- In multiple years ARE reported negative operating cash flow during the last 5 years.
1.2 Ratios
- The Return On Assets of ARE (0.23%) is worse than 75.00% of its industry peers.
- With a Return On Equity value of 0.92%, ARE is not doing good in the industry: 75.00% of the companies in the same industry are doing better.
- ARE has a worse Return On Invested Capital (1.63%) than 75.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 0.23% | ||
| ROE | 0.92% | ||
| ROIC | 1.63% |
ROA(3y)1.36%
ROA(5y)1.65%
ROE(3y)4.06%
ROE(5y)5.54%
ROIC(3y)N/A
ROIC(5y)N/A
1.3 Margins
- ARE has a worse Profit Margin (0.16%) than 62.50% of its industry peers.
- The Operating Margin of ARE (0.62%) is worse than 62.50% of its industry peers.
- ARE has a Gross Margin of 6.92%. This is in the lower half of the industry: ARE underperforms 62.50% of its industry peers.
- ARE's Gross Margin has declined in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 0.62% | ||
| PM (TTM) | 0.16% | ||
| GM | 6.92% |
OM growth 3YN/A
OM growth 5YN/A
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y-22.44%
GM growth 5Y-16.54%
2. Health
2.1 Basic Checks
- The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so ARE is destroying value.
- Compared to 1 year ago, ARE has more shares outstanding
- Compared to 5 years ago, ARE has more shares outstanding
- The debt/assets ratio for ARE is higher compared to a year ago.
2.2 Solvency
- An Altman-Z score of 2.12 indicates that ARE is not a great score, but indicates only limited risk for bankruptcy at the moment.
- ARE's Altman-Z score of 2.12 is on the low side compared to the rest of the industry. ARE is outperformed by 75.00% of its industry peers.
- ARE has a Debt/Equity ratio of 0.43. This is a healthy value indicating a solid balance between debt and equity.
- With a decent Debt to Equity ratio value of 0.43, ARE is doing good in the industry, outperforming 75.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.43 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 2.12 |
ROIC/WACC0.17
WACC9.4%
2.3 Liquidity
- A Current Ratio of 1.15 indicates that ARE should not have too much problems paying its short term obligations.
- ARE has a better Current ratio (1.15) than 62.50% of its industry peers.
- A Quick Ratio of 1.14 indicates that ARE should not have too much problems paying its short term obligations.
- The Quick ratio of ARE (1.14) is better than 62.50% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.15 | ||
| Quick Ratio | 1.14 |
3. Growth
3.1 Past
- The Earnings Per Share has grown by an impressive 110.09% over the past year.
- ARE shows a strong growth in Revenue. In the last year, the Revenue has grown by 25.68%.
- ARE shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 4.16% yearly.
EPS 1Y (TTM)110.09%
EPS 3YN/A
EPS 5YN/A
EPS Q2Q%-37.65%
Revenue 1Y (TTM)25.68%
Revenue growth 3Y2.18%
Revenue growth 5Y4.16%
Sales Q2Q%19.98%
3.2 Future
- Based on estimates for the next years, ARE will show a very strong growth in Earnings Per Share. The EPS will grow by 44.25% on average per year.
- The Revenue is expected to grow by 19.59% on average over the next years. This is quite good.
EPS Next Y121.25%
EPS Next 2Y89.11%
EPS Next 3Y58.17%
EPS Next 5Y44.25%
Revenue Next Year26.6%
Revenue Next 2Y15.48%
Revenue Next 3Y12.96%
Revenue Next 5Y19.59%
3.3 Evolution
- The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
- The Price/Earnings ratio is 306.73, which means the current valuation is very expensive for ARE.
- Based on the Price/Earnings ratio, ARE is valued a bit more expensive than 75.00% of the companies in the same industry.
- The average S&P500 Price/Earnings ratio is at 27.25. ARE is valued rather expensively when compared to this.
- A Price/Forward Earnings ratio of 20.78 indicates a rather expensive valuation of ARE.
- 87.50% of the companies in the same industry are more expensive than ARE, based on the Price/Forward Earnings ratio.
- ARE is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 25.98, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 306.73 | ||
| Fwd PE | 20.78 |
4.2 Price Multiples
- 62.50% of the companies in the same industry are cheaper than ARE, based on the Enterprise Value to EBITDA ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | 20.36 |
4.3 Compensation for Growth
- The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
- ARE's earnings are expected to grow with 58.17% in the coming years. This may justify a more expensive valuation.
PEG (NY)2.53
PEG (5Y)N/A
EPS Next 2Y89.11%
EPS Next 3Y58.17%
5. Dividend
5.1 Amount
- ARE has a Yearly Dividend Yield of 2.21%. Purely for dividend investing, there may be better candidates out there.
- ARE's Dividend Yield is rather good when compared to the industry average which is at 0.90. ARE pays more dividend than 87.50% of the companies in the same industry.
- ARE's Dividend Yield is a higher than the S&P500 average which is at 1.82.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.21% |
5.2 History
- On average, the dividend of ARE grows each year by 6.05%, which is quite nice.
- ARE has been paying a dividend for at least 10 years, so it has a reliable track record.
- ARE has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)6.05%
Div Incr Years1
Div Non Decr Years17
5.3 Sustainability
- 563.75% of the earnings are spent on dividend by ARE. This is not a sustainable payout ratio.
- ARE's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP563.75%
EPS Next 2Y89.11%
EPS Next 3Y58.17%
AECON GROUP INC / ARE.CA FAQ
What is the fundamental rating for ARE stock?
ChartMill assigns a fundamental rating of 3 / 10 to ARE.CA.
What is the valuation status of AECON GROUP INC (ARE.CA) stock?
ChartMill assigns a valuation rating of 2 / 10 to AECON GROUP INC (ARE.CA). This can be considered as Overvalued.
Can you provide the profitability details for AECON GROUP INC?
AECON GROUP INC (ARE.CA) has a profitability rating of 1 / 10.
What is the valuation of AECON GROUP INC based on its PE and PB ratios?
The Price/Earnings (PE) ratio for AECON GROUP INC (ARE.CA) is 306.73 and the Price/Book (PB) ratio is 2.33.
What is the financial health of AECON GROUP INC (ARE.CA) stock?
The financial health rating of AECON GROUP INC (ARE.CA) is 3 / 10.