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Jacobs (JEC) Q1 Earnings: What's in Store for the Stock?

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Jacobs Engineering Group Inc. is slated to report first-quarter fiscal 2017 (ended Dec 31, 2016) results on Feb 8, 2017, before the market opens.

Since the beginning of Feb 2017, Jacobs shares recorded a return of 1.13% – outperforming 0.84% return provided by the Zacks categorized Engineering/R&D Services industry.

Over the last four quarters, Jacobs recorded a positive average earnings surprise of 7.19%.

Let’s see how things are shaping up prior to this announcement.

Factors to Play

Jacobs’ business exposure in diversified end markets is expected to reinforce financials in the fiscal first quarter.

Increased transportation spending of the government authorities of Australia and the UK, higher demand for power generation services, rise in aviation demand and growth in spending of biopharmaceutical majors would likely boost Jacobs’ revenues in the quarter under review. Also, the company believes that margins in the to-be-reported quarter would improve on the back of greater cost management and strategic restructuring initiatives.

However, several persistent headwinds within the construction industry might hurt the company’s results. For instance, weak energy and mining market conditions have been hindering growth for industrial and construction companies like Jacobs. This is because low prices of oil and core metals have forced the energy and mining companies to postpone, reduce or even cut investments. At the same time, a stronger U.S. currency might weigh over Jacobs’ foreign revenues and earnings in the to-be-reported quarter.

Based on the current market scenario, Jacobs projects fiscal 2017 earnings to lie within the range of $3.00–$3.30 per share.

Earnings Whispers

Our proven model does not conclusively show that Jacobs is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as we will see below.

Zacks ESP: Jacobs currently has an Earnings ESP of 0.00%. This is because both the Zacks Consensus Estimate and the Most Accurate estimate are pegged at 63 cents per share.

Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks Rank: Jacobs carries a favorable Zacks Rank #2. However, a 0.00% ESP makes surprise prediction difficult.

Note that we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Key Picks

Some other well-ranked stocks within the industry are listed below:

AECOM (ACM - Free Report) , with an Earnings ESP of +1.89%, and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Chicago Bridge & Iron Company N.V. , with an Earnings ESP of +0.67%, and a Zacks Rank #2.

Century Communities, Inc. (CCS - Free Report) , with an Earnings ESP of +14.93%, and a Zacks Rank #2.

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