What’s infrastructure?
Infrastructure refers back to the constructing blocks or primary framework of a society. It refers to bodily belongings reminiscent of roads, ports, and bridges. It additionally refers to renewable vitality belongingsdigital connectivity, and electrified mobility. This consists of fibre-optic and 5G networks, EV-charging stations and information centres.
There may be at present a major quantity of infrastructure spending underway in Canada. Sturdy inhabitants progress dynamics is driving this demand, as is the transition to a internet zero, digitally related economic system. In response, the Canadian authorities has made a dedication to “construct, shield, and empower the nation in response to vital international financial shifts”.
The 2025 federal finances tackles this. The federal government’s plan to speculate $115 billion over the following 5 years consists of investments in core public key infrastructure reminiscent of water, wastewater, and transit. It additionally consists of investments in well being infrastructure belongings, and commerce and transport infrastructure. Lastly, additional funding in renewable vitality tasks, and digital infrastructure are deliberate.
Aecon: Canada’s high infrastructure firm
Aecon Group Inc. (TSX:ARE) is considered one of Canada’s largest publicly-traded building and infrastructure improvement corporations. The corporate generated income of $4.2 billion in 2024 and its present backlog stands at $10.8 billion, 80% larger than final 12 months. The next chart reveals the corporate’s income breakdown.
In Aecon’s newest quarter, the third quarter of 2025, the corporate’s reported backlog highlighted the expansion in infrastructure spending in Canada. Additionally, Aecon’s income elevated 20% to $1.5 billion, and its earnings per share (EPS) got here in at $0.53. Whereas this was decrease than the prior 12 months as a result of 4 fixed-price legacy tasks, which encountered many difficulties, it was effectively above expectations.
The excellent news right here is that these legacy tasks are nearing substantial completion and as this occurs, profitability will enhance.
Wanting forward
Aecon’s backlog quantity is a transparent sign that this firm is dealing with a protracted runway of very wholesome demand. The corporate will report its fourth quarter and year-end monetary outcomes on March 6th. Expectations are calling for 67% EPS progress to $0.35. For the total 12 months, expectations are calling for EPS of $0.23, which compares to a lack of $0.95 in 2024.
Wanting additional forward, together with the robust progress in demand, Aecon’s EPS is anticipated to see a step-change in progress. Extra particularly, EPS is anticipated to return in at $1.66, $2.06, and $3.47 in 2026, 2027 and 2028 respectively. The robust backlog numbers help this progress, as does the truth that Aecon’s unprofitable legacy tasks will come to completion and due to this fact not be on the books anymore.
Aecon’s inventory value stays attractively valued
Primarily based on Aecon’s anticipated EPS within the coming years, we are able to see that Aecon’s inventory value is fairly attractively valued, buying and selling at 18 occasions 2027’s anticipated earnings. It’s vital to make observe of the truth that Aecon has considerably de-risked its enterprise lately. A method that the corporate has achieved that is by looking for out partnerships for its tasks. This serves to restrict the debt-load that Aecon takes on and derisks Aecon and its inventory.
The underside line
The growth in infrastructure spending in Canada is taking part in out properly for Aecon. Within the subsequent 5 years, Aecon will profit from will increase in spending on public key infrastructure aimed toward modernizing and updating previous infrastructure that’s falling aside in some circumstances.
The corporate can even profit from will increase in infrastructure spending aimed on the new internet zero, related economic system, which is quickly rising. Aecon’s backlog factors to the expansion that’s in retailer. Traders can achieve publicity to this immediately, by shopping for Aecon’s attractively valued inventory.