Is it a good company at a reasonable price? This stock has mostly done well for shareholders, but I would worry about the amount of debt them have. It is classified as a medium risk level. Analysts think that they DPRs will soon be at a good level. The stock price testing is putting it at a current reasonable price.
I do not own this stock of Aecon Group Inc (TSX-ARE, OTC-AEGXF). This stock has been coming up on Canada Stock Channel Weekly email in 2020. Site is Canada Stock Channel.
When I was updating my spreadsheet, I noticed that in 2024 they basically lost money because of a greater decline in Revenue that in expenses. Analysts do expect this stock to return to profitability in 2025. If you had invested in this company in December 2014, for $1,006.74 you would have bought 94 shares at $10.71 per share. In December 2024, after 10 years you would have received $556.48 in dividends. The stock would be worth $2,558.68. Your total return would have been $3,115.16. This would be a total return of 13.35% per year with 9.78% from capital gain and 3.57% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $10.71 | $1,006.74 | 94 | 10 | $556.48 | $2,558.68 | $3,115.16 |
The current dividend yield is moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 3.70%. The 5, 10 and historical dividend yields are also moderate at 4.23%, 3.26% and 2.46%. The dividends are increasing at a low rate (less than 8% per year) at 6.2% per year over the past 5 years. The last dividend increase was in 2024 and it was for 2.7%.
The Dividend Payout Ratios (DPR) need improvement and analyst think this will happen in 2026. The DPR for 2024 for Earnings per Share (EPS) is non-calculable due to an earnings loss with 5 year coverage far too high at 96%. The DPR for 2024 for Adjusted Earnings per Share (AEPS) is non-calculable due to an earnings loss with 5 year coverage far too high at 97%. The DPR for 2024 for Cash Flow per Share (CFPS) is non-calculable due to a negative cash flow with 5 year coverage good at 39%. The DPR for 2024 for Free Cash Flows (FCF) are non-calculable due to a negative cash flow with 5 year coverage at far too high at 720% and 396%. There is no agreement on what FCF is in 2024 and varies from a negative 23M to a negative 130M. Analysts think that the DPRs for EPS and AEPS will improve in 2026.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 0.00% | 95.80% |
| AEPS | $0.00 | 97.12% |
| CFPS | $0.00 | 38.71% |
| FCF 1 | -36.21% | 719.97% |
| FCF 2 | -203.93% | 396.28% |
Debt Ratios are need improving and the company has too much debt. The Long Term Debt/Market Cap Ratio for 2024 is good at 0.15 and currently at 0.37. The Liquidity Ratio for 2024 is low at 1.15 and 1.20 currently. If you added in Cash Flow after dividends, the ratios do not improve at 1.12 and currently at 1.17. I prefer this ratio to be 1.50 or higher. The Debt Ratio for 2024 is low at 1.43 and 1.35 currently. I prefer this ratio to be 1.50 or higher. The Leverage and Debt/Equity Ratios for 2024 are too high at 3.37 and 2.37 and currently at 3.88 and 2.88. I prefer these ratios to be below 3.00 and 2.00.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.15 | 0.37 |
| Intang/GW | 0.07 | 0.18 |
| Liquidity | 1.15 | 1.20 |
| Liq. + CF | 1.12 | 1.17 |
| Debt Ratio | 1.43 | 1.35 |
| Leverage | 3.37 | 3.88 |
| D/E Ratio | 2.37 | 2.88 |
The Total Return per year is shown below for years of 5 to 28 to the end of 2024. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below. Note that dividends were not paid between 2003 and 2007.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2019 | 5 | 6.16% | 12.60% | 9.21% | 3.39% |
| 2014 | 10 | 7.99% | 13.35% | 9.78% | 3.57% |
| 2009 | 15 | 9.26% | 6.31% | 4.05% | 2.26% |
| 2004 | 20 | #NUM! | 9.71% | 7.36% | 2.35% |
| 1999 | 25 | 8.79% | 11.26% | 8.87% | 2.38% |
| 1996 | 28 | 9.37% | 7.55% | 1.83% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 8.84, 11.45 and 14.06. The corresponding 10 year ratios are 15.15, 17.71 and 20.27. The corresponding historical ratios are 8.62, 12.14 and 16.91. The current P/E Ratio is 108.16 based on a stock price of $20.55 and EPS estimate for 2025 of $0.19. This stock price testing suggests that the stock price is relatively expensive. Note that EPS expected in 2025 is quite low after an earnings loss in 2024.
However, the EPS estimate for 2026 is $1.46. This implies a P/E Ratio of 14.08. If you compare that to the 10 year ratios above, it is lower than the low ratio of the 10 year median ratios. In this case the stock price testing suggests that the stock price is relatively cheap.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 8.84, 11.45 and 14.06. The corresponding 10 year ratios are 11.95, 14.31 and 16.67. The corresponding historical ratios are 8.62, 12.14 and 16.91. The current P/E Ratio is 158.08 based on a stock price of $20.55 and EPS estimate for 2025 of $0.13. This stock price testing suggests that the stock price is relatively expensive. Note that AEPS expected in 2025 is quite low after an earnings loss in 2024.
However, the AEPS estimate for 2026 is $1.42. This implies a P/E Ratio of 14.47. If you compare that to the 10 year ratios above, it is between the low and median ratio of the 10 year median ratios. In this case the stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $7.76. The 10-year low, median, and high median Price/Graham Price Ratios are 0.86, 1.02 and 1.22. The current ratio is 2.65 based on a stock price of $20.55. This ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
However, the Graham Price for 2026 is $21.51. This produces a ratio of 0.96 based on a stock price of $20.55. This ratio is below the low ratio of the 10 year median ratios. In this case the stock price testing suggests that the stock price is relatively cheap.
I get a 10-year median Price/Book Value per Share Ratio of 1.24. The current ratio is 1.46 based on a book Value of $887.8M, Book Value per Share of 14.08 and a stock price of $20.55. The current ratio is 17% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10-year median Price/Cash Flow per Share Ratio of 5.52. The current ratio is 11.68 based on Cash Flow per Share estimate for 2025 of $1.76, Cash Flow of $111M, and a stock price of $20.55. The current ratio is 111% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 2.46%. The current dividend yield is 3.70% based on dividends of $0.76 and a stock price of $20.55. The current dividend yield is 50% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 3.26%. The current dividend yield is 3.70% based on dividends of $0.76 and a stock price of $20.55. The current dividend yield is 13% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10-year median Price/Sales (Revenue) Ratio 0.29. The current ratio is 0.25 based on Revenue estimate for 2025 of $5,104M, Revenue per Share of $80.94 and a stock price of $20.55. The current ratio is 12% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
Results of stock price testing is that the stock price is probably reasonable and below the median. The 10 year dividend yield test says this. It is confirmed by the P/S Ratio test. The rest of the testing is showing the stock price from cheap to reasonable. It is really only the P/CF Ratio test is showing the stock price as expensive.
When I look at analysts’ recommendations, I find Strong Buy (5), Buy (3), and Hold (3). The consensus would be a Strong Buy. The 12 month stock price consensus is $23.27 with a high of $28.00 and low of $19.00. The consensus stock price of $23.27 implies a total return of 16.93% with 13.24% from capital gains and 3.70% from dividends based on a current stock price of $20.55.
There are mixed views of this stock on Stock Chase. One says that the company is held back by legacy issues. One likes WSP better. Some think it is a buy because it is cheap. Another analyst says it is risky. Amy Legate-Wolfe on Motley Fool thinks that this is a stock to buy and hold as housing ramps up. Jitendra Parashar on Motley Fool says this stock is a reliable dividend stock with a strong backlog. The company put out a Press Release about their year-end results for 2024. The company put out a Press Release about their second quarter of 2025.
Simply Wall Street via Yahoo Finance looks at this company and thinks it is paying too much out in Dividends. Simply Wall Street has two warnings out on this stock of dividend of 3.79% is not well covered by earnings or free cash flows; and large one-off items impacting financial results.
Aecon Group Inc is a Canada-based company that operates in two segments: Construction and Concessions. The Construction segment includes various aspects of the construction of public and private infrastructure projects, mainly in the transportation sector. Its concessions segment is engaged in the development, financing, construction, and operation of infrastructure projects. The company generates the maximum revenue from the Construction segment. Its web site is here Aecon Group Inc.
The last stock I wrote about was about was GFL Environmental Inc (TSX-GFL, NYSE-GFL) ... learn more. The next stock I will write about will be Chemtrade Logistics Income Fund (TSX-CHE.UN, OTC-CGIFF) ... learn more on Monday, August 24, 2025 around 5 pm.
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