Are Construction Stocks Lagging AECOM (ACM) This Year?

Aecom Technology (ACM) is outperforming the construction sector year-to-date, with a 2.8% return compared to the sector's -4.4%, driven by a 1% increase in its full-year earnings estimate and a Zacks Rank #2 (Buy); Janus International Group (JBI) is another construction stock showing strong performance, with an 11.2% return YTD and a 150% increase in current year EPS estimates over the past three months, also holding a Zacks Rank #2 (Buy).

Analysis

The Construction sector, currently holding a Zacks Sector Rank of #12 out of 16 and comprising 90 individual stocks, has demonstrated weakness with an average year-to-date return of -4.4%. Within this challenging environment, Aecom Technology (ACM) has emerged as an outperformer, delivering a 2.8% year-to-date return. ACM, a member of the Engineering - R and D Services industry (Zacks Industry Rank #64), is also outperforming its specific industry group, which has averaged a 1.2% loss year-to-date. Aecom Technology's positive trajectory is underscored by a Zacks Rank of #2 (Buy) and a 1% upward revision in its consensus full-year earnings estimate over the past quarter, signaling strengthening analyst sentiment and an improving earnings outlook. Another notable outperformer in the Construction sector is Janus International Group, Inc. (JBI), which has achieved a significant 11.2% year-to-date return. JBI also carries a Zacks Rank #2 (Buy), largely influenced by a substantial 150% increase in its consensus EPS estimate for the current year over the past three months. JBI belongs to the Building Products - Miscellaneous industry (Zacks Industry Rank #89), which has seen a considerable -10.9% year-to-date decline, making JBI's performance particularly noteworthy. The Zacks Rank system, which emphasizes earnings estimates and revisions, suggests both ACM and JBI have improving earnings outlooks with potential to outperform the market in the near term.

Key Decisions for Investors

• Consider Aecom Technology (ACM) for investment, given its positive 2.8% year-to-date return which contrasts with the broader Construction sector's -4.4% decline, supported by a 1% upward revision in full-year earnings estimates and a Zacks Rank #2 (Buy).
• Evaluate Janus International Group (JBI) as a potential addition to portfolios, due to its strong 11.2% year-to-date performance and a significant 150% increase in current year consensus EPS estimates over the past three months, also holding a Zacks Rank #2 (Buy).
• Investors should closely monitor ongoing earnings estimate revisions for both ACM and JBI, as these are critical indicators underpinning their current 'Buy' ratings and their potential to sustain outperformance against a weaker sector and their respective industries.
• Given the underperformance of the broader Construction sector and the specific industries of ACM and JBI, focus on company-specific fundamental strengths, such as those highlighted for these two firms, when making allocation decisions within this group.