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ACS

Analysis before buying or selling ACS shares

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If you are interested in investing in the Spanish company ACS in the near future, this article will show you how you can make a good analysis of its share price. In particular, we will provide you with some general stock market data about this group, but we will also look at its detailed activities, its competitive environment and its main strengths and weaknesses.

Elements to consider before selling or buying ACS shares

Analysis N°1

The industrial sector in Spain and the construction and engineering sector in general and their developments are of course strong indicators.

Analysis N°2

In general, attention should be paid to the group's mergers and acquisitions which may strengthen its position.

Analysis N°3

The evolution of the Spanish economy but also of the European construction industry are indicators to be taken into account as well.

Analysis N°4

Finally, a close eye should be kept on any major changes in government regulations that could affect the smooth running of ACS's business.

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General presentation of ACS

Of course, before going any further in our analysis of the ACS Group's business environment, it is necessary to check that you are familiar with the company and its main activities. This will help you to better understand the main issues and how it can develop in the coming years. Here is a quick overview of the group and its activities.

ACS for Zctividades de Construccion y Servicos is a Spanish company specialising in the construction sector. More specifically, it is one of the main groups in this sector in Spain. In order to better understand the activities carried out by this company, they can be divided into several poles according to the share of turnover that they generate, as follows:

  • Firstly, infrastructure and building construction activities account for more than 78% of the group's turnover, including civil engineering infrastructure such as motorways, waterworks and railways, residential and non-residential buildings.
  • ACS also provides industrial services, which account for 17.9% of its turnover, including the development, construction, installation and maintenance of electricity, gas and water distribution networks, industrial production systems, telecommunications networks, traffic control systems and other services.
  • Lastly, environmental services, including cleaning, waste collection and treatment, account for 4.1% of ACS's turnover.

It should be noted here that the ACS Group also offers maintenance services for urban and industrial infrastructures and port and logistics services.

In terms of the geographical distribution of the ACS Group's activities, only 12.7% of the company's turnover is generated in Spain. Europe generates 5.6% of turnover, the United States is the largest market with 38.2%, Australia generates 20.1% of turnover, Canada 3.5%, Mexico 2.7% and the rest of the world 17.2%.

Analysis before buying or selling ACS shares
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The major competitors of ACS

As we have briefly mentioned above, the ACS Group is currently one of the leaders in the construction sector in the world and in Spain. However, it is not the only one operating in this sector and therefore faces some major competitors that you should be aware of and take into account when analysing this stock. Here is a quick overview of ACS's current main rivals:

Vinci

First of all, the Vinci Group, formerly known as SGE for Société Générale d'Entreprises, is one of the leaders in the construction and concessions sector in the world with a payroll of almost 194,000 people. The group operates in about 116 different countries and is active in various segments including motorways, concessions, energy and construction.

Bouygues

Another of ACS's biggest competitors is the Bouygues group and its subsidiary Bouygues Construction, in addition to its activities in real estate, telecoms and media. The Bouygues group is currently active in almost 90 different countries around the world and has a workforce of over 115,000 people, many of whom work internationally.

DLF Limited

Finally, there is also the competition from DLF Limited which is currently one of the largest real estate developers in India and has been listed on the Bombay Stock Exchange since 2007.

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Positive factors for ACS shares
The factors in favour of a rise in the ACS share price:

We will now take a quick look at the strengths and weaknesses of ACS in order to determine how the company can improve its growth and therefore its stock price. Let's start by summarising the various strengths of ACS.

  • Firstly, one can appreciate the good diversification of the activities of this company, which benefits from a great deal of experience in the primary civil and industrial infrastructure sector. This diversification presents an undeniable advantage in the face of competition in this sector, particularly when the group applies for concessions or PPPs.
  • There has also been strong development of activities linked to certain very buoyant segments in recent years, particularly with the group's concession activities via the Iridium subsidiary, which offers good development capacity in this segment with growing needs.
  • Still on the subject of the strengths of the ACS group, it is of course interesting to talk about the good international expansion strategy carried out by this company. For some years now, ACS has been trying to expand its activities outside Spain as much as possible. In this way, it has managed to establish itself effectively and sustainably in certain high-potential markets such as the Middle East and Asia. In addition to the operational leverage that this gives ACS, it allows it to limit its exposure to the Spanish market alone. In addition to these promising markets, ACS has a strong presence in Brazil, India, Germany, Chile and Mexico, which are also high potential markets.
  • Finally, another of the ACS Group's great strengths is its very large workforce. The group currently employs no less than 130,000 people worldwide.
Negative factors for ACS shares
The factors in favour of a drop in the ACS share price:

As we have just seen, the ACS Group has many strengths and advantages in terms of its current growth capacity and its financial and economic situation. However, before taking a buy position on this stock, we will now tell you about some weaknesses of this group that you should also take into account.

  • Firstly, from a purely financial point of view, there has been a significant decline in the company's profit margins for some time. This concerns both the operating profit margins and the net profit margins of the group, which have fallen considerably in recent years, despite a clear increase in revenues.
  • The second and final weakness of the group is of course the strong competition in this sector. Due to the presence of many players on the international market, the development of ACS' market share is limited and so is its growth potential.
The information supplied here is only for indicative purposes and should not be used without the completion of a comprehensive and complete fundamental analysis of this asset notably taking into account exterior data, future publications and announcements and all fundamental events and news that could influence the strengths and weaknesses or make them more or less significant. This information does not in any way constitute recommendations relating to the completion of transactions or a solicitation to buy or sell an asset.

Frequently Asked Questions

What are the main subsidiaries of ACS?

ACS owns the subsidiaries Dragados, VYCSA, TECSA, Drace, Dravosa, GEOCISA, Cogesa, Dycvensa and Dycasa in the construction sector, Grupo Cobra, Grupo Etra, SEMISA, MAESSA, IMESAPI, EYRA, CYMI, Dragados Offshore, Grupo Masa, Intecsa-Uhde Industrial, Initec Energia, SICE, Makiber and ENYSE in industry, Urbaser in waste management, Clece in business services, Dragados SPL, Continental Auto in intercity bus transport and TP Ferro, a concessionaire of LGV.

Is it possible to trade on the fall in the ACS share price?

If buying one or more ACS shares means hoping that the stock will increase in value over time in order to resell it with a capital gain in the years to come, it is also possible to take advantage of possible downward movements in this stock thanks to the so-called short selling method. It is thus possible to speculate directly on the decline of this stock by using certain derivative products such as CFDs offered online.

Which analysis should be used to study the ACS share price?

In order to carry out a good analysis of the ACS share price, it is essential not to favour one type of analysis in particular but rather to combine several types of analysis. Among the essential analyses for stock market trading, technical analysis and fundamental analysis are the most frequently used by professional and private traders.

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