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What is infrastructure?
Infrastructure refers to the building blocks or basic framework of a society. It refers to physical assets such as roads, ports, and bridges. It also refers to renewable energy assets, digital connectivity, and electrified mobility. This includes fibre-optic and 5G networks, EV-charging stations and data centres.
There is currently a significant amount of infrastructure spending underway in Canada. Strong population growth dynamics is driving this demand, as is the transition to a net zero, digitally connected economy. In response, the Canadian government has made a commitment to “build, protect, and empower the country in response to significant global economic shifts”.
The 2025 federal budget tackles this. The government’s plan to invest $115 billion over the next five years includes investments in core public key infrastructure such as water, wastewater, and transit. It also includes investments in health infrastructure assets, and trade and transport infrastructure. Finally, further investment in renewable energy projects, and digital infrastructure are planned.
Aecon: Canada’s top infrastructure company
Aecon Group Inc. (TSX:ARE) is one of Canada’s largest publicly-traded construction and infrastructure development companies. The company generated revenue of $4.2 billion in 2024 and its current backlog stands at $10.8 billion, 80% higher than last year. The following chart shows the company’s revenue breakdown.
In Aecon’s latest quarter, the third quarter of 2025, the company’s reported backlog highlighted the growth in infrastructure spending in Canada. Also, Aecon’s revenue increased 20% to $1.5 billion, and its earnings per share (EPS) came in at $0.53. While this was lower than the prior year due to four fixed-price legacy projects, which encountered many difficulties, it was well above expectations.
The good news here is that these legacy projects are nearing substantial completion and as this happens, profitability will improve.
Looking ahead
Aecon’s backlog number is a clear signal that this company is facing a long runway of very healthy demand. The company will report its fourth quarter and year-end financial results on March 6th. Expectations are calling for 67% EPS growth to $0.35. For the full year, expectations are calling for EPS of $0.23, which compares to a loss of $0.95 in 2024.
Looking further ahead, along with the strong growth in demand, Aecon’s EPS is expected to see a step-change in growth. More specifically, EPS is expected to come in at $1.66, $2.06, and $3.47 in 2026, 2027 and 2028 respectively. The strong backlog numbers support this growth, as does the fact that Aecon’s unprofitable legacy projects will come to completion and therefore not be on the books anymore.
Aecon’s stock price remains attractively valued
Based on Aecon’s expected EPS in the coming years, we can see that Aecon’s stock price is pretty attractively valued, trading at 18 times 2027’s expected earnings. It’s important to make note of the fact that Aecon has significantly de-risked its business in recent years. One way that the company has done this is by seeking out partnerships for its projects. This serves to limit the debt-load that Aecon takes on and derisks Aecon and its stock.
The bottom line
The boom in infrastructure spending in Canada is playing out nicely for Aecon. In the next five years, Aecon will benefit from increases in spending on public key infrastructure aimed at modernizing and updating old infrastructure that’s falling apart in some cases.
The company will also benefit from increases in infrastructure spending aimed at the new net zero, connected economy, which is rapidly growing. Aecon’s backlog points to the growth that’s in store. Investors can gain exposure to this today, by buying Aecon’s attractively valued stock.
