Arcosa, Inc. (NYSE: ACA)

Sector: Industrials Industry: Engineering & Construction CIK: 0001739445
Market Cap 5.46 Bn
P/B 2.11
P/E 36.77
P/S 1.93
ROIC (Qtr) 6.17
Div Yield % 0.18
Rev 1y % (Qtr) 24.58
Total Debt (Qtr) 1.58 Bn
Debt/Equity (Qtr) 0.61

About

Arcosa, Inc. (ACA) is a prominent player in the infrastructure sector, providing a variety of products and solutions to construction, engineered structures, and transportation markets across North America. The company conducts its operations through three primary segments: Construction Products, Engineered Structures, and Transportation Products. In the Construction Products segment, Arcosa specializes in the production and sale of natural and recycled aggregates, specialty materials, and construction site support equipment. This segment's primary...

Read more

Price action

Investment thesis

Bull case

  • Healthy cash reserves of 220M provide 23.66x coverage of short-term debt 9.30M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 469.30M provides strong 18.70x coverage of stock compensation 25.10M, indicating sustainable incentive practices.
  • Robust free cash flow of 318.90M exceeds capital expenditure of 150.40M by 2.12x, indicating strong organic growth funding capability.
  • Tangible assets of 3.39B provide exceptional 47.50x coverage of deferred revenue 71.30M, showing strong service capability backing.
  • Operating cash flow of 469.30M provides strong 6.58x coverage of deferred revenue 71.30M, indicating service delivery capability.

Bear case

  • Operating cash flow of 469.30M barely covers its investment activities of (1.32B), with a coverage ratio of -0.36, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 469.30M provides thin coverage of dividend payments of (9.90M) with a -47.40 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 220M provide limited coverage of acquisition spending of (1.19B), which is -0.18x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating earnings of 315.80M show weak coverage of depreciation charges of 226.30M, with a 1.40 ratio indicating high capital intensity and potential reinvestment needs.
  • Operating cash flow of 469.30M barely covers operating expenses of (13.10M) with a -35.82 ratio, suggesting thin operational efficiency margins and limited flexibility.

Segments Breakdown of Revenue (2024)

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Engineering & Construction
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 PWR Quanta Services, Inc. 62.71 Bn 61.60 2.31 6.02 Bn
2 FER Ferrovial SE 48.08 Bn 14.25 5.05 -
3 FIX Comfort Systems Usa Inc 35.76 Bn 42.69 4.30 0.39 Bn
4 EME EMCOR Group, Inc. 29.29 Bn 25.91 1.80 0.42 Bn
5 APG APi Group Corp 17.37 Bn 111.36 2.27 3.05 Bn
6 MTZ Mastec Inc 17.01 Bn 51.39 1.24 2.77 Bn
7 J Jacobs Solutions Inc. 16.94 Bn 58.56 1.41 2.71 Bn
8 BLD TopBuild Corp 13.35 Bn 23.52 2.55 3.09 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.38 1.61
EV to Cash from Ops. EV/CFO 14.83 6.94
EV to Debt EV to Debt 4.40 11.81
EV to EBIT EV/EBIT 22.03 17.80
EV to EBITDA EV/EBITDA 13.04 13.77
EV to Free Cash Flow [EV/FCF] EV/FCF 21.82 55.77
EV to Market Cap EV to Market Cap 1.27 1.20
EV to Revenue EV/Rev 2.46 1.65
Price to Book Value [P/B] P/B 2.11 5.81
Price to Earnings [P/E] P/E 36.77 35.89
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 15.01 2.51
Dividend Payout Ratio % Div Payout % (Qtr) 6.60 25.81
Dividend per Basic Share Div per Share (Qtr) 0.15 0.24
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 2.30 4.05
Interest Coverage Int. cover (Qtr) 2.65 80.15
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 20.25 -166.01
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -70.93 637.72
Dividend Growth (1y) % Div 1y % (Qtr) -25.00 5.87
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 45.93 92.47
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 48.28 8.04
EBIT Growth (1y) % EBIT 1y % (Qtr) 58.85 85.34
EBT Growth (1y) % EBT 1y % (Qtr) 25.88 42.07
EPS Growth (1y) % EPS 1y % (Qtr) 14.77 43.76
FCF Growth (1y) % FCF 1y % (Qtr) 150.31 -20.95
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 24.12 32.46
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.56 1.14
Cash Payout Ratio Cash Payout (Qtr) 0.02 0.05
Cash Ratio Cash Ratio (Qtr) 0.38 0.38
Current Ratio Curr Ratio (Qtr) 2.02 1.55
Debt to Equity Ratio Debt/Equity (Qtr) 0.61 0.89
Interest Cover Ratio Int Coverage (Qtr) 2.65 80.15
Times Interest Earned Times Interest Earned (Qtr) 2.65 80.15
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 19.10 0.40
EBIT Margin % EBIT Margin % (Qtr) 11.15 -2.31
EBT Margin % EBT Margin % (Qtr) 6.94 -4.59
Gross Margin % Gross Margin % (Qtr) 21.60 20.38
Net Profit Margin % Net Margin % (Qtr) 5.20 -5.96