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Jacobs (JEC) Q2 Earnings Beat Estimates, Outlook Positive

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Jacobs Engineering Group Inc. reported mixed second-quarter fiscal 2017 (ended Mar 31, 2017) results.

Quarterly adjusted earnings came in at 78 cents per share, beating the Zacks Consensus Estimate of 71 cents. The bottom line also came higher than the year-ago tally of 75 cents per share.

 

Revenues

Revenues in the fiscal second quarter declined 17.2% year over year to $2,302.6 million. The top line also fell short of the Zacks Consensus Estimate of $2,614 million.

Eliminating the impact of restructuring and other charges, quarterly revenues came in at $2,319.1 million.

Segment Details

Revenues of Petroleum & Chemicals segment came in at $557.8 million, plunging 35.6% year over year. Aerospace & Technology segment’s quarterly sales dropped 13.8% to $577 million. Industrial segment’s revenues were down 12.6% year over year to $582.5 million.

However, Buildings & Infrastructure segments’ sales inched up 1.1% year over year $585.2 million.

Costs/Margin

Direct cost of contracts, a major expenditure for Jacobs, decreased 19.4% year over year to $1,883.3 million. Selling, general and administrative expenses edged down approximately 1.8% year over year to $351.1 million.

The company’s operating margin contracted 10 basis points (bps) year over year to 3%.

At the end of the first six months of fiscal 2017, the company’s backlog totaled $18.5 billion, up 1.4% year over year.

Balance Sheet

As of Mar 31, 2017, Jacobs’ cash and cash equivalents were approximately $674.6 million compared with $655.7 million as of Sep 30, 2016. Long-term debt was $334.9 million compared to $385.3 million as of Sep 30, 2016.

The company’s capital expenditure at the end of the fiscal second quarter was $24.7 million, as against $13.3 million incurred in the year-ago quarter.

Outlook

Jacobs aims to generate profitable commercial growth on the back of sound restructuring programs. The company intends to drive its business on the back of strategic cost saving plans and record backlog levels. Based on the current market conditions, the company anticipates fiscal 2017 earnings to lie within the $3.00–$3.30 per share range.  

Notably, this Zacks Rank #2 (Buy) company believes that the inaugural dividend scheme of 15 cents per share, as well as the ongoing share repurchase program would ensure its commitment toward shareholders, moving ahead.  

Other Key Picks

Some other top ranked stocks in the industry are listed below:

Boise Cascade Company (BCC - Free Report) generated an outstanding average positive earnings surprise of 114.74% over the trailing four quarters and currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Armstrong World Industries, Inc. (AWI - Free Report) currently carries a Zacks Rank #2 and has an average positive earnings surprise of 1.73% for the last four quarters.

TopBuild Corp. (BLD - Free Report) also carries a Zacks Rank #2 and generated an average positive earnings surprise of 27.38% over the past four quarters.

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