Beamr video compression achieves up to 50% improvement for AVs
On Friday, DA Davidson reiterated its Buy rating on Arcosa (NYSE: NYSE:ACA), currently trading at $78.75, with a steadfast price target of $110.00. The stock has faced headwinds, declining nearly 17% year-to-date, though InvestingPro data shows analysts maintain bullish targets ranging from $100 to $125. The research firm’s analyst, Brent Thielman, after virtual meetings with the company’s management, including CEO Antonio Carrillo, expressed continued confidence in the company’s prospects. The discussions centered on a variety of topics such as the future of the wind industry, potential effects of tariffs, asset monetization opportunities, and trends in the aggregates sector.
Thielman’s price target is based on a multiple of 12 times and 11 times the firm’s estimated EBITDA for the years 2025 and 2026, respectively. Currently, the company trades at an EV/EBITDA multiple of 12.9x, with last twelve months EBITDA of $421 million. The target is also supported by an asset value/sum-of-the-parts (SOTP) analysis, which suggests a valuation range between $103 and $110 per share. Additionally, the analyst highlighted the potential for free cash flow (FCF) generation, projecting upwards of $6 per share in 2025, building on the company’s strong current free cash flow yield of 8%.
Arcosa’s aggregates platform, which contributes more than 60% to the company’s EBITDA, is seen as a significant driver of opportunity and value. The firm also stands to benefit from increased spending on utility transmission and the potential for asset monetization. These factors are expected to outweigh any concerns related to the wind sector or the impact of tariffs.
The analyst’s outlook suggests a strong trajectory for Arcosa, with multiple avenues for growth and value creation. The company’s focus on expanding its aggregates platform and leveraging utility transmission spending, along with its asset monetization opportunities, position it favorably for the coming years. InvestingPro analysis reveals the company maintains a FAIR financial health score of 2.33, with revenue growing at 11.4% and strong liquidity metrics. For deeper insights into Arcosa’s financial health and growth prospects, access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Arcosa Inc. reported its fourth-quarter 2024 earnings, revealing a significant miss in both earnings per share (EPS) and revenue compared to forecasts. The company recorded an EPS of $0.46, falling short of the anticipated $0.81, while revenue came in at $666.2 million against a forecast of $692.68 million. Despite the quarterly earnings miss, Arcosa achieved record revenues for the full year 2024, alongside improved adjusted EBITDA and margins. Free cash flow increased to $330 million from $94 million in 2023, and net debt to adjusted EBITDA was reduced to 2.9x.
DA Davidson reaffirmed its Buy rating on Arcosa with a steady price target of $110.00, despite the initial negative market reaction to the earnings report. The firm highlighted that all three of Arcosa’s business groups show promising visibility into EBITDA growth and margin expansion by 2025. The Aggregates segment is expected to grow, and the Construction Products segment should continue to be a significant source of liquidity. Arcosa’s strategic acquisitions and organic projects completed in 2024 are expected to support future growth, with the company projecting 2025 revenues between $2.8 billion and $3.0 billion and adjusted EBITDA expected to grow by 30% at the midpoint.
Analysts from DA Davidson also noted that Arcosa’s strategic positioning bodes well for future performance, emphasizing the company’s solid prospects for financial growth and margin improvement.
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