Arcosa, Inc. (ACA): what the price requires

At today's price, Arcosa, Inc. (ACA) is priced for today's economics sustained for ~5.3 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/ACA

Headline

FieldValue
TickerACA
CompanyArcosa, Inc.
Current price$144.93/sh
CompositionAggregates 26% / Specialty materials and asphalt 16% / Aggregates intrasegment sales -2% / Construction site support 5% / Utility and related structures 29% / Wind towers 12% / Inland barges 13% / Steel components 0%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed7.1%
Operating margin today11.1%
Margin compression implied-4.0pp
Must persist for5.3y
Multiple paid29x operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 9% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~1.8 years.

How unusual the bet is: elevated

ReferenceValue
vs own history+0.27σ
cohort percentile (of 225 peers)67
sustained it ~5.3 years at this level29%
implied end-window share0%

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset3.11x5expensive
Earnings4.51x5expensive
Relative1.35x5expensive
Growth1.19x3expensive

Families that justify the price: Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.8%); the inversion above states its own rate.

Per-Model Detail (n=18)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$120.681.20xyesFCF base $0.2B, growth 8% (input: historical growth), terminal g 4.0%, WACC 7.8%, 6yr projection
DCF Exit MultipleGrowth$153.100.95xyesExit EV/EBITDA: 13.4x / 15.4x / 17.4x (bear / base = today's held flat / bull), 6yr
Relative ValuationRelative$107.741.35xyesP/E 22.21x (blended: static sector reference 18x + trailing (TTM) 32x), scenarios: 18.6x / 22.2x / 25.9x (bear / base = reference held flat / bull), EV/EBITDA 12x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$48.912.96xyesBV/sh $53.92, ROE (TTM) 8.4%, ke 9.3%
Two-Stage Excess ReturnAsset$46.573.11xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$122.041.19xyesRev $2.8B, growth 8% (input: historical growth; tapered), Terminal P/S: 2.1x / 2.5x / 2.9x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$54.362.67xyesEPS $4.53, growth 2% (input: historical EPS growth), PEG=16.02 (Overvalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$32.114.51xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.25B × (1−5%) / WACC 7.8% → EPV (no growth)
Residual IncomeAsset$46.193.14xyesBV $53.92 + 5yr PV of (ROE (TTM) 8.4% − Kₑ 9.3%) × BV; BV grows 5.5%/yr
Graham NumberAsset$74.131.96xyes√(22.5 × EPS $4.53 × BVPS $53.92) — Graham's conservative floor
EV/EBITDA RelativeRelative$106.641.36xyesEBITDA $0.56B × sector EV/EBITDA 12.0x
FCF YieldEarnings$23.436.19xyesFCF $238.6M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$17.728.18xyesSBC-adj FCF $0.21B (FCF $0.24B − SBC $0.03B) capitalized at Kₑ
Ben Graham FormulaEarnings$146.170.99xyesEPS $4.53 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$7.5319.25xyesBV $53.92 × (ROIC 1.1% / WACC 7.8%)
P/Sales SectorRelative$143.451.01xyesRevenue $2.82B × sector P/S 2.5x
PEG Fair ValueRelative$169.880.85xyesEPS $4.53 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings YieldEarnings$48.972.96xyesEPS $4.53 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$1.4b
Net debt / NOPAT (after-tax)4.90x
Net debt / operating income (pre-tax)4.64x
Interest coverage2.7x
Share count CAGR (dilution)0.2%
Burning cashno

Bullet Takeaways

Bull Case

The first thing a skeptic sees is a leveraged industrial with cyclical end-markets and a return on equity of only 8.4%, below its cost of capital, and that is a fair starting worry. But the data tells a transformation story that changes what the business is. On April 1, 2026, Arcosa completed the $450 million sale of its inland-barge business, the last and most cyclical piece of its old transportation portfolio, finishing a deliberate multi-year pivot toward construction aggregates and infrastructure structures. The company being valued today is not the volatile barge-and-rail manufacturer of its history; it is increasingly an aggregates and engineered-structures business with steadier demand and structurally higher margins. The historical returns understate where the reshaped company is headed.

The core segments are delivering exactly what the transformation promised. Construction Products grew revenue 5% with aggregate volumes up 4% and pricing up 2%, and the Stavola acquisition is adding scale in attractive Northeast aggregates markets, driving freight-adjusted aggregates revenue growth with cash gross profit per ton up double digits. Aggregates is one of the best businesses in industrials: local quarries are effectively irreplaceable assets with pricing power that compounds with inflation. On the infrastructure side, Engineered Structures grew with utility-structures revenue up more than 15% and segment margin reaching a record 21.1%, and the utility backlog jumped 28% to $558 million with long-term orders extending into 2028. The FY2025 10-K describes healthy construction-products demand supported by increased infrastructure spending and private non-residential activity (FY2025 10-K, accession 0001739445-26-000029).

The financial trajectory ties it together. Full-year 2026 guidance points to adjusted EBITDA of $565 million, up 11%, with margin expanding to a record 21.3%, faster than the 6% revenue growth, which is the operating leverage of a higher-margin mix coming through. The grid-modernization and infrastructure-spending tailwinds behind utility structures are multiyear and policy-supported, and the visible backlog into 2028 gives unusual revenue clarity for an industrial. The bull case is a company that has deliberately swapped cyclical, low-margin revenue for stable, high-margin infrastructure exposure, is showing record margins and a growing backlog, and is positioned in two of the most durable corners of industrials, aggregates and grid infrastructure. The market is paying for that improved quality, and the improvement is real.

Bear Case

The structural vulnerability is the balance sheet that paid for the transformation. Net debt of about $1.37 billion is roughly 3.9 times operating income, and interest coverage is near 3.3 times, a meaningful load taken on largely to fund the Stavola aggregates acquisition. The $450 million barge sale helps, and management can apply proceeds to debt, but the company is carrying real leverage into a business whose end-markets, construction and infrastructure, remain cyclical and weather-sensitive. If construction demand softens or a downturn hits before the leverage comes down, the fixed interest burden compresses earnings exactly when the business can least afford it. A reshaped portfolio does not eliminate the cycle; it just changes which part of it Arcosa is exposed to.

The returns underscore that the transformation is a work in progress, not a finished result. Return on equity is 8.4% against a cost of equity around 9.3%, and return on invested capital is only about 1.1%, meaning the business is not yet earning its cost of capital on the enlarged asset base. The asset and earnings-power methods reflect this directly: the excess-return methods land near $47 to $49, Earnings Power Value near $33, and the FCF-yield methods in the high teens to low $20s, all far below the $136 price (June 27, 2026). Those methods price the current returns and the large capital base from the acquisitions, and on that basis the stock looks expensive. The transformation has to translate into genuinely higher returns on capital, not just higher margins on a bigger balance sheet, for the price to be justified.

The valuation leaves little room for the execution to slip. At a level that implies the premium segment grows at its ceiling for roughly 11 years, the price assumes the infrastructure and aggregates tailwinds run long and the integration of acquisitions delivers. Aggregates pricing power is real but volume is tied to construction cycles, utility-structures demand depends on continued grid-investment spending that could be paced or deferred, and any acquisition carries integration risk. The bear case is that you are paying a full price for a leveraged industrial mid-transformation, whose current returns do not yet earn the cost of capital, and whose end-markets, however improved, are still cyclical. The improvement is genuine; the price asks you to assume it compounds without interruption while the debt is still elevated.

Valuation

Inverting the price points to a demanding assumption, with one caveat: the segment the model identifies as carrying the premium, Transportation Products, is the very business Arcosa has been exiting, so the read is moderate-confidence and somewhat dated by the barge sale. On that basis the price implies operating growth in the premium segment held near the top of its sustainable range for about 11 years, solved at an 8.9% cost of capital. Treat the figure as approximate. On the historical base rate only about 14% of comparable fast-growers sustained a pace like that for even ten years, so the read comes out elevated, above what the fundamentals comfortably support. The better way to read it is that the price assumes the reshaped, higher-margin company compounds for a long time.

The valuation X-ray splits sharply by family, and the split is the information. The forward-growth and relative methods reach or approach the price: the perpetual-growth DCF near $159, the exit-multiple DCF near $181, the discounted-future-market-cap method near $134, and the relative and EV/EBITDA methods near $111. The asset and earnings-power methods land far below: the excess-return methods near $47, Earnings Power Value near $33, the FCF-yield methods in the high teens to low $20s. The reason for the gap is that the static methods capitalize current returns on a large post-acquisition capital base, while the growth methods extrapolate the margin and revenue improvement the transformation is producing. The blended read sits near $83, well below the price, so on the static frames the stock is expensive and only on the growth view is it justified.

The leverage is real and computable: net debt near $1.37 billion is about 3.9 times operating income with coverage near 3.3 times, a constraint that the barge-sale proceeds can ease. The valuation conclusion is that Arcosa is priced for the success of its transformation, not its current returns. If the higher-margin aggregates and infrastructure mix lifts return on capital toward the level the margins suggest, the growth methods are right and the price is fair. If returns stay near current levels while the leverage lingers, the static methods are the better guide and the price is full.

Catalysts

The first-quarter 2026 report and the surrounding events centered on the completion of Arcosa's transformation. On April 1 the company finalized the $450 million sale of its inland-barge business, the final step in shifting toward higher-margin construction and infrastructure. Operationally, Construction Products revenue grew 5% with aggregate volumes up 4% and pricing up 2%, and Engineered Structures grew 4% with utility-structures revenue up more than 15% and a record 21.1% segment margin. The utility-structures backlog reached $558 million, up 28% from the start of the year, with orders extending into 2028. Full-year 2026 guidance points to revenue near $2.65 billion, adjusted EBITDA of $565 million up 11%, and a record margin around 21.3%.

The forward catalysts are deleveraging, integration, and end-market demand. The items to watch are the application of barge-sale proceeds to reduce the elevated debt, the integration and contribution of the Stavola aggregates acquisition, aggregate pricing and volume trends across the construction cycle, the conversion of the growing utility-structures backlog into revenue, and the pace of grid-modernization and infrastructure spending that underpins the structures demand. The next quarterly print, due in late July or early August, will show whether the record-margin guidance is tracking and how quickly leverage is coming down. Continued margin expansion with debt reduction would validate the transformation thesis; softer construction demand or stalled deleveraging would leave the full price exposed.

Sources: Arcosa Q1 2026 results and barge-sale completion (investing.com, theglobeandmail.com); ACA Q1 2026 earnings call transcript (fool.com, 2026-05-01); ACA Q1 2026 earnings call (aol.com).

Peer Cohorts (Per Segment, With Filing Citations)

Construction Products (reported)

Engineered Structures (reported)

Transportation Products (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

View the full interactive ACA report on boothcheck