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Jacobs (JEC) to Report Q1 Earnings: What's in the Offing?

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Premium technical services company Jacobs Engineering Group Inc. is scheduled to report first-quarter fiscal 2018 (ended Dec 31, 2017) results before the market opens on Feb 7.

Notably, Jacobs delivered a positive average earnings surprise of 9.65%, in the last four quarters. Notably, the company’s earnings in fourth-quarter fiscal 2017 came in at 98 cents, beating the Zacks Consensus Estimate of 82 cents.

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

Factors at Play

Elevated infrastructure spending in the United States and recovering economic conditions in China (a major industrial end-market) are anticipated to boost demand for Jacobs’ premium engineering and construction management services. The $4.6-billion contract win from the Missile Defense Agency (August 2017), contract wins for the U.S. government’s national priority programs and the Blue Canopy acquisition (August 2017) are anticipated to bolster revenues of Jacobs’ Aerospace & Technology line of business (LOB). On the other hand, new investments made in targeted sectors (like social infrastructure, water and transportation), elevated demand from the Asia Pacific, Americas and European end-markets, and the latest transportation contract wins are expected to strengthen the top-line performance of Jacobs’ Buildings & Infrastructure LOB. Revenues of Industrial LOB will likely improve on the back of the recovering mining & minerals business, robust life-science business and sturdy field services sales in the United States.

Strong top-line performance of the aforementioned segments, greater cost management, ongoing restructuring moves and timely project delivery are expected to reinforce the company’s bottom-line performance.

However, Jacobs believes its revenues in the to-be-reported quarter might dip sequentially (excluding the impact of the CH2M buyout in December 2017). The company expects that the challenging energy market conditions might continue to hurt the near-term revenues of its Petroleum & Chemicals LOB.

We also fear that other headwinds such as intense industry rivalry or adverse foreign currency-translation impact might weigh over Jacobs’ top- and bottom-line performances in the soon-to-be-reported quarter.

Earnings Whispers

Our proven model does not conclusively show that Jacobs is likely to beat on 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.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks ESP: Jacobs currently has an Earnings ESP of 0.00%. This is because the Zacks Consensus Estimate of 67 cents comes in line with the Most Accurate Estimate.

Zacks Rank: Jacobs carries a favorable Zacks Rank #2 but an Earnings ESP of 0.00% makes surprise prediction difficult.

It should be noted that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some stocks within the Zacks Categorized Construction Sectorthat you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Boise Cascade, L.L.C. (BCC - Free Report) , with an Earnings ESP of +15.79% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

D.R. Horton, Inc. (DHI - Free Report) , with an Earnings ESP of +6.06% and a Zacks Rank #1.

TopBuild Corp. (BLD - Free Report) , with an Earnings ESP of +0.31% and a Zacks Rank #2.

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