Procore signs multi-year strategic collaboration agreement with AWS
Tuesday, Arcosa Inc's (NYSE:ACA) stock rating was reiterated as a Buy by DA Davidson, highlighting the company's strong performance in key markets. The $3.56 billion market cap company, which according to InvestingPro data is trading near its 52-week low of $68.11, has seen its stock decline by about 8% in the past week, potentially presenting an opportunity for investors. According to Brent Thielman of DA Davidson, the value of lettings—a measure of the amount of construction work contracted—has shown healthy growth within Arcosa's major markets on a trailing twelve-month (TTM) basis. This growth aligns with the company's robust financial health, as InvestingPro data shows revenue growth of 11.35% over the last twelve months and a healthy current ratio of 1.85, indicating strong liquidity.
The analysis showed a 14% increase in the weighted average value of lettings across the company's significant markets compared to the previous year. This figure also represents a 24% rise relative to the average of the past two years. Texas (TX) and New Jersey (NJ), which account for 35% and 20% of Arcosa's Construction Products/Aggregates revenue respectively (pro forma), have exhibited particularly strong growth.
In Texas, the TTM lettings value surged by 33% year-over-year (Y/Y), with values standing at 92% and 133% above the 5-year and 10-year averages, respectively. Fiscal year-to-date (YTD) bid values in Texas have already surpassed the total for the entire fiscal year of 2022. Although the schedules for fiscal years 2025 and 2026 indicate that the value of bids may be slightly below that of fiscal 2024, they are still significantly higher than those seen over the last decade-plus.
New Jersey's TTM lettings comparison showed a 12% Y/Y increase, with the 5-year and 10-year averages at 28% and 44% higher, respectively. This data underpins the company's stable position in its primary markets and supports the analyst's positive outlook on Arcosa's stock. Analyst price targets range from $100 to $125, suggesting significant upside potential. For deeper insights into Arcosa's valuation and growth prospects, including 8 additional ProTips and comprehensive financial analysis, check out the detailed Pro Research Report available on InvestingPro.
In other recent news, Arcosa Inc. reported its fourth-quarter 2024 earnings, which revealed a notable miss in its earnings per share (EPS) compared to forecasts, recording an EPS of $0.46 against the anticipated $0.81. Revenue also fell short, coming in at $666.2 million, below the forecast of $692.68 million. Despite these quarterly setbacks, Arcosa achieved record revenues for the full year 2024 and demonstrated robust performance through strategic acquisitions and organic growth projects. DA Davidson maintained its Buy rating on Arcosa with a price target of $110, emphasizing the company's solid prospects for financial growth and margin improvement. The firm noted that all three of Arcosa's business groups show promising visibility into EBITDA growth and margin expansion by 2025. Arcosa's aggregates platform, contributing more than 60% to the company's EBITDA, is seen as a significant opportunity for growth. Additionally, Arcosa's strategic positioning and improved visibility into EBITDA outcomes for all business segments bode well for the company's future performance, according to DA Davidson analysts.
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