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Aecon Group (TSX:ARE): Valuation Check After Finch West LRT Revenue Service Milestone

Simply Wall St · 2d ago

Aecon Group (TSX:ARE) just saw a key project milestone turn into a long term revenue story, as the Finch West LRT in Toronto officially entered revenue service with Aecon holding a 33.3% equity stake.

See our latest analysis for Aecon Group.

The market seems to be taking notice, with a recent 7 day share price return of 14.96 percent and a 90 day share price return of 33.95 percent. The 3 year total shareholder return of 297.25 percent suggests momentum has been building for some time.

If projects like Finch West LRT have you thinking about where else infrastructure style demand could show up, it may be worth exploring fast growing stocks with high insider ownership for other compelling ideas.

With the share price already surging and analysts only seeing modest upside from here, the key question is whether Aecon still trades below its intrinsic value or if the market is already pricing in years of growth.

Most Popular Narrative: 3.4% Undervalued

With Aecon last closing at CA$31.96 against a narrative fair value of CA$33.09, the story leans slightly in favor of further upside.

Aecon's strategic pivot toward a higher mix of collaborative, non-fixed price contracts (now 76% of backlog) and recurring revenue segments like utilities and concessions is improving earnings quality and margin stability, likely supporting better net margins and mitigating volatility from legacy fixed-price projects.

Read the complete narrative.

Curious how steady revenue, rising margins, and a leaner risk profile can still justify upside from here? The narrative leans on ambitious earnings upgrades, disciplined contract structures, and a future valuation multiple that looks more conservative than many of today’s fast growing industrial names. Want to see exactly how those moving parts stack up into that fair value call?

Result: Fair Value of $33.09 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, recent margin compression and heavy exposure to public infrastructure budgets mean that execution hiccups or shifting government priorities could quickly challenge this upside case.

Find out about the key risks to this Aecon Group narrative.

Build Your Own Aecon Group Narrative

If you see the story differently or want to stress test the numbers yourself, you can build a custom narrative in just a few minutes: Do it your way

A great starting point for your Aecon Group research is our analysis highlighting 4 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.