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Construction services provider, Jacobs Engineering Group Inc. (JEC - Analyst Report), reported strong fiscal fourth-quarter 2013 (ended Sep 27, 2013) financial results. While overall results improved year over year, earnings fell short of the Zacks Consensus Estimate.

The company reported fourth-quarter adjusted earnings per share of 84 cents, 5.0% higher than year-ago adjusted earnings of 80 cents. The increase in earnings was a result of improved revenues and margins in the quarter. The quarterly earnings missed the Zacks Consensus Estimate of 87 cents by 3.4%.

In fiscal 2013, Jacobs generated adjusted earnings per share of $3.23, a hike of 11.0% from $2.91 a year ago. However, results missed the Zacks Consensus Estimate of $3.26 per share.

Revenues: Revenues gained 12.8% year over year to $3.14 billion in the reported quarter, in line with the Zacks Consensus Estimate. The Technical Professional Services component’s revenues came in at $1.66 billion, up compared with $1.63 billion in the year-ago quarter. The Field Services component’s revenues were $1.49 billion, up compared with $1.15 billion reported in the fourth quarter of fiscal 2012.

In fiscal 2013, revenues amounted to $11.82 billion, registering an increase of 8.5% year over year. Also, revenues were in line with the Zacks Consensus Estimate.

Costs/Margin: In the reported quarter, direct costs of contracts, a major expenditure for Jacobs, climbed 14.0% from the year-ago quarter and settled at $2.67 billion. Selling, general and administrative (SG&A) expenses came in at $299.5 million, up 7.3% year over year.

In the quarter, operating margin reached 5.6%, declining 45 basis points year over year.

Backlog: Exiting the quarter, backlog stood at $17.2 billion, rising 8.2% from $15.9 billion in the year-ago quarter. It includes backlog from the Technical Professional Services component of $11.12 billion versus $10.27 billion at the end of the fourth quarter of fiscal 2012, with the remainder coming from the Field Services component.

Balance Sheet: Jacobs’ cash and cash equivalents at the end of fiscal fourth-quarter were approximately $1.26 billion, decreasing from $1.30 billion recorded at the end of the previous quarter. Total debt at quarter-end declined to $437.9 million, compared with $445.0 million as of Jun 28, 2013.

Outlook: Management predicts ample opportunities to increase market share as end markets promise significant improvement. However, the first quarter of fiscal 2014 is expected to be weak. For fiscal 2014, the company expects earnings per share in the range of $3.35 to $3.90. 

Other Stocks to Consider

Jacobs currently carries a Zacks Rank #2 (Buy). Other stocks worth a watch in the industry include VSE Corp. (VSEC - Snapshot Report), Quanta Services, Inc. (PWR - Analyst Report) and KB Home (KBH - Analyst Report). While VSE Corp. carries a Zacks Rank #1 (Strong Buy), Quanta Services and KB Home carry a Zacks Rank #2.

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