With housing concerns mounting, thanks to rising interest rates and mortgage pressures, a smart investor looks for protection. Aecon (TSX: ARE) could be that safety valve. It builds essential infrastructure like roads and transit, and governments tend to keep spending on these projects, even when the housing market cools. This makes it a natural portfolio hedge if housing turns down. Let’s get more into why.
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Into earnings
Aecon recently reported its first-quarter (Q1) 2025 results, and the headline numbers are telling. Revenue rose to $1.06 billion, up 25% from a year earlier. That strength was driven by growing demand in nuclear, industrial, utilities, and civil work. While revenue surged, profitability lagged: the company posted an operating loss of $40.7 million, down from a $4.2 million loss in the prior year.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) fell sharply to $3.6 million, down from $32.9 million, largely because of a negative gross profit of $28.6 million on a legacy fixed-price project. Aecon also recorded a loss per share of $0.60, compared to $0.10 a year ago .
Don’t let that scare you off. The company’s order backlog hit a record $9.7 billion, up from $6.3 billion last year. That means Aecon already has almost 10 times one quarter’s worth of work in hand. It also booked $4.1 billion in new contracts in Q1 alone, including major efforts at Pickering nuclear and the Scarborough subway extension .
What next?
You’ll notice the weak earnings from the legacy project. That’s a drag this quarter, but it appears to be a one-off. Management says the remaining fixed-price projects will be wrapped up by Q3 2025, and that profitability should improve afterward. In other words, once those projects finish, the real strength in Aecon’s pipeline should fuel more consistent profits.
Aecon also pays a quarterly dividend of $0.185 per share or $0.76 annually, for an annual yield near 3.7% at current prices. That provides steady income even while the legacy issues work their way through. Of course, this isn’t a perfect play. The drop in EBITDA shows how costly large, fixed-price projects can be. Rising material costs or labour shortages could also press margins, and any slowdown in government infrastructure spending would hit its core business. That makes it essential to watch how fast Aecon resolves its legacy project losses and how it manages future contracts.
But that risk is exactly why it can play the role of a hedge. When housing cools, governments often ramp up infrastructure to help the economy. Aecon is poised to benefit if that happens. With its backlog already secured and more projects likely, it could hold its ground, even thrive, during a broader real estate downturn.
Bottom line
Aecon won’t grab headlines like a hot growth stock. It won’t soar overnight. But it builds the backbone of Canadian infrastructure. And when home building slows, roads, transit, and utilities often don’t. That makes Aecon the kind of steady, income-generating hedge that can complement a portfolio facing housing market uncertainty.
So, if you’re looking for a play that could outlast a housing correction, Aecon has the credentials. It has the contracts, the income, and the government support. The legacy issues may weigh it down for a bit, but once resolved, it could shine again. Sometimes the best hedge isn’t about growth; it’s about resilience.
