Aecon Group Inc T.ARE

Ink Research

[retiredcf]

Morning Report: Aecon helps the INK CIN Index build a decade of outperformance

November 15, 2024
 

November 14th marked the 10-year live anniversary of the INK Canadian Insider (CIN) Index. The 50-stock rules-based Index serves as the institutional track record of the INK Edge Outlook process (micro-cap stocks and low-volume stocks are excluded from index consideration). Including dividends, the Index has more than tripled over the past decade and is up 11.74% on an annualized basis. By our estimate, that is about 3.1% better than the S&P/TSX Composite Index including dividends. Outperforming the broad market benchmark by three percent annually is a respectable showing by most measures, and INK would like to give a shout out to our Index administrator Solactive who calculates the Index live for us intra-day and implements the quarterly rebalancings. On that front, today marks the fall rebalancing, and Aecon Group (ARE) is one stock that will remain as a constituent. In fact, Aecon entered the Index during last fall's rebalancing and has been a meaningful contributor to Index performance with the stock advancing 167% over the past year. Importantly, insiders kept buying after we last featured it here on August 2nd.

Aecon reported Q3 revenue of $1.275 billion, up 3% from Q3 2023. Profit attributable to shareholders came in at $0.85 per diluted share, down from $1.63 in the comparable period, but adjusted EBITDA was $126.9 million, up from $32.0 million in Q3 2023. It reported a backlog as of Q3 end of $5.98 billion, down from $6.202 billion at the end of Q3 2023. However, new contract awards booked in Q3 were $1.069 billion, up from $591 million in the comparable period. Based on its backlog, Aecon believes it is positioned to achieve further revenue growth beginning in 2025 and over the next few years.

 

[Gabriel]

Thaks for sharing this. We very well surpass 600m EBITDA in 2025 or 2026 and that market will grant it a 7 to 8x multiple considering the projected and hoped stability in earnings and reinforced revenue stream from concessions. 4.2B to 4.8B over 60m remaining shares means 70 to 80$ per share since we have arguably no debt.

[Gabriel]

I meant we may very well surpass..