WEBULL
WebtradeDownload

Aecon Group (TSX:ARE) Could Be 25% Undervalued Following The GO Expansion Contract Win

Simply Wall St · 2d ago

Aecon Group (TSX:ARE) is back in focus after its ONxpress joint venture executed alliance contracts with Metrolinx for the multi billion dollar GO Expansion project in Ontario, adding new work to its construction backlog.

Despite the ONxpress contract win, Aecon Group’s share price has eased recently, with a 30 day share price return of down 6.28% and a 90 day share price return of down 6.98%. However, its year to date share price return of 34.49% and very large 3 year total shareholder return of more than 3x suggest momentum has been building over a longer period.

Compare Aecon Group’s contract driven momentum with other infrastructure focused builders by scanning the hand picked 38 power grid technology and infrastructure stocks that could also benefit from major transit and grid upgrades.

After the run up earlier this year and the recent pullback, Aecon Group now sits at a more mixed entry point. Investors may consider whether it makes more sense to start building a position today or wait for a deeper reset before buying.

Most Popular Narrative: 24.6% Undervalued

At a last close of CA$42.39, the most followed narrative places Aecon Group’s fair value at CA$56.20, which implies meaningful upside if those assumptions play out.

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.

Want to see what kind of revenue path and margin rebuild have to underpin that fair value for Aecon Group? The narrative leans heavily on multi year backlog visibility, higher quality contracts, and a richer earnings mix that pushes the valuation beyond simple headline numbers.

Result: Fair Value of CA$56.20 (UNDERVALUED)

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

However, this Aecon Group narrative still faces key risks, including pressure on construction margins and heavy exposure to government backed projects that can be sensitive to policy shifts.

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

Another View: SWS DCF Model Paints A Tighter Picture For Aecon Group

While the analyst narrative points to Aecon Group being around 24.6% undervalued, the SWS DCF model points the other way. On that framework, the current CA$42.39 share price sits above an estimated fair value of CA$35.68, which implies the stock screens as overvalued on future cash flows.

That raises a practical question for you. Should more weight sit on earnings based targets or on the cash flow path our DCF model assumes for Aecon Group?

Look into how the SWS DCF model arrives at its fair value.

ARE Discounted Cash Flow as at Sep 2026
ARE Discounted Cash Flow as at Sep 2026

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Aecon Group for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 14 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

With Aecon Group pulling in both optimism and caution, this is a moment to look at the data yourself and move decisively. To weigh the trade off between upside drivers and flagged concerns in one place, review the 3 key rewards and 1 important warning sign.

Looking for more investment ideas beyond Aecon Group?

If Aecon Group has your attention, do not stop there. Broadening your watchlist now could help you spot opportunities before they become crowded.

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.