Critical Review: AECOM (NYSE:ACM) and Shimizu (OTCMKTS:SHMUY)

AECOM (NYSE:ACM) and Shimizu (OTCMKTS:SHMUY) are both industrials companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, dividends, valuation, institutional ownership, profitability and risk.

Earnings and Valuation

This table compares AECOM and Shimizu”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AECOM	$16.14 billion	0.60	$561.77 million	$3.83	19.54
Shimizu	$13.67 billion	0.77	$835.68 million	$4.90	12.66

Shimizu has lower revenue, but higher earnings than AECOM. Shimizu is trading at a lower price-to-earnings ratio than AECOM, indicating that it is currently the more affordable of the two stocks.

Dividends

AECOM pays an annual dividend of $1.24 per share and has a dividend yield of 1.7%. Shimizu pays an annual dividend of $1.82 per share and has a dividend yield of 2.9%. AECOM pays out 32.4% of its earnings in the form of a dividend. Shimizu pays out 37.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. AECOM has increased its dividend for 3 consecutive years.

Profitability

This table compares AECOM and Shimizu’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AECOM	3.16%	28.52%	6.08%
Shimizu	8.11%	9.08%	3.37%

Institutional & Insider Ownership

85.4% of AECOM shares are owned by institutional investors. 0.5% of AECOM shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings for AECOM and Shimizu, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AECOM	0	4	9	0	2.69
Shimizu	0	0	0	0	0.00

AECOM currently has a consensus price target of $114.82, indicating a potential upside of 53.44%. Given AECOM’s stronger consensus rating and higher probable upside, equities research analysts plainly believe AECOM is more favorable than Shimizu.

Risk & Volatility

AECOM has a beta of 0.93, suggesting that its stock price is 7% less volatile than the S&P 500. Comparatively, Shimizu has a beta of 0.02, suggesting that its stock price is 98% less volatile than the S&P 500.

Summary

AECOM beats Shimizu on 12 of the 17 factors compared between the two stocks.

About AECOM

AECOM, together with its subsidiaries, provides professional infrastructure consulting services worldwide. It operates in three segments: Americas, International, and AECOM Capital. The company offers planning, consulting, architectural and engineering design, construction and program management, and investment and development services to public and private clients. It is also involved in the investment and development of real estate projects. In addition, the company provides construction services, including building construction and energy, and infrastructure and industrial construction. It serves transportation, water, government, facilities, environmental, and energy sectors. The company was formerly known as AECOM Technology Corporation and changed its name to AECOM in January 2015. AECOM was incorporated in 1980 and is headquartered in Dallas, Texas.

About Shimizu

Shimizu Corporation, together with its subsidiaries, engages in the construction, development, engineering, and life cycle valuation businesses in Japan and internationally. The company proposes, plans, designs, builds, repairs, manages, operates, and maintains offices, plants, schools, hospitals, and other buildings, such as nursing homes, rehabilitation centers, temples, shrines, and architectures; offers design, build, and renovation for tunnels, bridges, dams, urban infrastructure, energy facilities, and other public works; provides construction for manufacturing facilities, high-rise buildings, hospitals, bridges, subways, and other projects; and develops and rents real estate properties, including condominiums, data centers, office buildings, logistics facilities, and other properties. It also offers engineering, procurement, and construction services in solar and wind power projects, environmental clean-up engineering, turn-key order fulfillment of plants, and ICT systems and engineering projects. In addition, the company provides facility operation and management services; infrastructure management, maintenance, and concession services; and generates power using renewable energy and sells electricity, as well as involved in commercialization of smart cities and provision of services using ICT technology. Further, it engages in the lease and sale of construction equipment and materials; provision of interior finishing and rebar works; insurance agency, security, and travel agency services; supply of PCR test kits; and rental of various tower cranes, crawler cranes, and other construction machinery and equipment. Additionally, the company offers construction equipment consulting services, such as construction planning, maintenance, and management services; property and building management services; and real estate consulting and brokerage services, as well as tenant leasing services. Shimizu Corporation was founded in 1804 and is headquartered in Tokyo, Japan.