Arcosa Stock May Be Setting Up for a Big Momentum Shift

The security sports a 10.7% year-to-date lead

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Arcosa Inc (NYSE:ACA) is up 2.5% at $58.44 at last check. The company earlier this month declared a regular quarterly cash dividend of $0.05 per share, which translates to a forward dividend of $0.20, and a dividend yield of 0.35%. This dividend will be paid out on April 29 to ACA stockholders of record as of April 14.

The security is today pacing for its best close since early July, after surging to its highest level since November. Meanwhile, the $59 level is still acting as a ceiling, despite Arcosa stock's 10.7% year-to-date lead.

ACA Intraday

Analysts are firmly bullish towards ACA, with all six in coverage calling it a "strong buy." Plus, the 12-month consensus target price of $65.29 is an 11.9% premium to the stock's current perch. The options pits echo that optimism. This is per the security’s Schaeffer's put/call open interest ratio (SOIR), which sits higher than just 10% of readings from the past year, indicating short-term options traders have rarely been more call-biased.

Arcosa stock is trading at an inflated forward price-earnings ratio of 32.26, and a price-sales ratio of 1.3. The company's balance sheet is also unfavorable due to the $679.5 million it holds in total debt, versus the $72.9 million it holds in cash. In addition, ACA has suffered on the bottom line, experiencing a 38% drop in annual net income since 2019.

Still, the company's top-line growth has remained consistent, with annual revenues jumping 39% since 2018. ACA is also estimated to grow revenues by 6%, and earnings by 33.5% next year, marking a huge shift from their previously declining net income to significant bottom-line growth. This means Arcosa stock could also see its valuation reach more attractive levels, making it a solid option for both long- and short-term investors.

 

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