Back to top

Image: Bigstock

Here's Why You Should Buy Jacobs' (JEC) Stock Right Now

Read MoreHide Full Article

We believe adding Jacobs Engineering Group Inc. stock to your portfolio will be a promising investment move at the moment.

Over the last six months, this Zacks Rank #2 (Buy) stock has rallied 1.8%, in contrast with the 8.9% loss incurred by the industry.



 

Why Should You Grab the Stock?

Top-Line Prospects: Elevated construction spending in the United States, impressive labor market scenario, modest inflation and Trump’s impetus to boost infrastructure spending have been triggering demand for Jacob’s state-of-the-art construction and engineering services for the past few quarters.

Jacobs believes increased global transportation, water infrastructure and resilience investments will bolster revenues of the Buildings & Infrastructure segment. Superior customer relationships and sturdier demand for advanced technology solutions will likely drive the company’s Aerospace & Technology segment’s revenue performance in the quarters ahead.

Solid life science, semiconductor, mining & minerals businesses are expected to stoke top-line growth of the company’s Industrial segment. Moreover, amid a lackluster energy market, the company expects that efforts made to strengthen its downstream chemicals and refining business will improve revenues of the Petroleum & Chemicals segment.

Per our in-house projections, Jacobs’ revenues will be up 42.3% in fiscal 2018 (ending September 2018) and 12.5% in fiscal 2019 (ending September 2019).

Contract Based Growth: Jacobs has a solid contract-winning history. In the last few months, the company has secured several contracts from renowned institutions and public-sector agencies like the Sasol Group Technology, Chevron Corp. (CVX - Free Report) , the U.S. Army, Equate Petrochemical Company, Exxon Mobil Corp. (XOM - Free Report) , Sellafield Ltd, Saudi Aramco, Kraton Corp. and Codelco. Such deals are anticipated to strengthen the company’s revenues and profit-making prospects in the quarters ahead.

Buyout and Restructuring Initiatives: Jacobs has been reinforcing its business on the back of diligent business acquisitions. In sync with this, the company successfully acquired CH2M (December 2017) for $2.85 billion. Jacobs expects to accrue cost synergies worth nearly $150 million in fiscal 2018, on the back of this buyout. Notably, the acquisition is also anticipated to drive the company’s earnings by 30-35 cents per share in fiscal 2018.

In December 2017, Jacobs announced that from the second half of fiscal 2018 (ended March 2018), it will report results in three global lines of businesses — Aerospace, Technology, Environmental and Nuclear, Energy, Chemicals and Resources, and Buildings, Infrastructure and Advanced Facilities.

The company planned this restructuring in a bid to integrate CH2M HILL Companies Ltd. (‘CH2M’) within its business and expects that the move will boost its operational efficacy.

Profitability: Jacobs believes increased focus over high-value businesses, efficient project execution and wider margins will drive its bottom-line performance in the near term.

Moreover, the company stated that reduced corporate tax rates (due to implementation of Tax Cuts and Jobs Act in December 2017) will help bolster its earnings in the upcoming fiscals. Notably, Jacobs predicts that the U.S. tax reform will boost its earnings by nearly 30 cents per share in fiscal 2018.

Jacobs raised its adjusted earnings guidance for fiscal 2018 to the $3.85-$4.25 per share range, higher than the previously estimated range of $3.55-$3.95 per share.

Per our in-house projections, the company’s earnings per share will be up 23.8% in fiscal 2018 and 19.1% in fiscal 2019.

Investor Alert: Breakthroughs Pending

A medical advance is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating substantial revenue, and even more wondrous products are in the pipeline.

Cures for a variety of deadly diseases are in sight, and so are big potential profits for early investors. Zacks names 5 stocks to buy now.

Click here to see them >>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Chevron Corporation (CVX) - free report >>

Exxon Mobil Corporation (XOM) - free report >>

Published in