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

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Jacobs Engineering Group Inc.’s shares have been rallying since third-quarter fiscal 2018 earnings release on Aug 6, 2018. In fact, Jacobs has outperformed the industry over the past year. Shares of Jacobs have gained 42.3% compared with the industry’s 14.3% growth. Its price performance is backed by an impressive earnings surprise history. The company surpassed earnings estimates in each of the trailing four quarters, resulting in an average of 15.38%.

Recently, Jacobs posted stellar third-quarter fiscal 2018 results, wherein both the top and bottom lines surpassed the Zacks Consensus Estimate by 4.3% and 13.4%, respectively. The upsurge was primarily driven by healthy segmental businesses and accelerated CH2M cost savings, along with prudent strategy execution. Jacobs’ revenues totaled $4,156.7 million, reflecting healthy growth of 65.3% from the year-ago quarter.

Meanwhile, the consensus estimate for the company’s 2018 and 2019 earnings has also been revised upward by 2.3% and 4.4%, respectively, over the past 30 days, reflecting optimism in the stock’s earnings prospects.



Let’s delve deeper into the other factors that make this Zacks Rank #2 (Buy) stock a profitable pick. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

What Makes Jacobs a Solid Pick?

Robust Performance: Jacobs exhibited stellar performance in the first nine months of fiscal 2018, courtesy of healthy segmental businesses, accelerated CH2M cost savings along with prudent strategy execution. The company’s total revenues grew 47.1% in the first nine months of fiscal 2018. In fact, in the third quarter of fiscal 2018, Aerospace, Technology, Environmental and Nuclear (“ATEN”) segment revenues increased 100% year over year, backed by major contract wins. Also, Buildings, Infrastructure and Advanced Facilities (“BIAF”) segment surged 72.9% from the year-ago figure.

Notably, the company’s ATEN business is performing well and is expected to deliver double digit year-over-year increase in profits in fiscal 2018, with continued strong growth in 2019 as well. These positives are likely to continue driving Jacobs’ bottom line in the upcoming quarters.

Solid Growth Prospects: Jacobs has solid growth prospects, as is apparent from the Zacks Consensus Estimate for current-year earnings of $4.36 per share, which is expected to grow 34.6% year over year. Meanwhile, the company’s revenues are expected to increase by a notable 50.4% in fiscal 2018. Moreover, its earnings and revenues are expected to increase 20.4% and 10.1% in fiscal 2019, respectively. Overall, the company constitutes a great pick in terms of growth investment, supported by a Growth Score of B.

Strong Backlog: Jacobs recorded higher backlog at the end of the fiscal third quarter, banking on solid contribution from field services, as well as an increase in major water infrastructure and life sciences design-build projects. Backlog was $27.2 billion, increasing 47% year over year on a reported basis and 8% on a pro-forma basis. The company is expecting the trend to continue in the coming quarters on the back of strong demand across both ATEN and BIAF line of businesses. Moreover, supply-demand fundamentals are strengthening the ECR business, wherein the company is focusing on more disciplined approach to capture opportunities in an improving market.

Solid VGM Score: The company has an impressive VGM Score of B. Our VGM Score identifies stocks that have the most attractive value, growth and momentum characteristics. In fact, our research shows that stocks with VGM Scores of A or B when combined with a Zacks Rank #1 or 2 make solid investment choices.

Other Stocks to Consider

Other top-ranked stocks in the Construction sector include D.R. Horton, Inc. (DHI - Free Report) , PulteGroup, Inc. (PHM - Free Report) and Century Communities, Inc. (CCS - Free Report) .

D.R. Horton sports a Zacks Rank #1 and its earnings for fiscal 2018 are expected to increase 40.5%.

PulteGroup, a Zacks Rank #1 stock, is expected to record 61.2% earnings growth for the year.

Century Communities carries a Zacks Rank #2 and its current-year earnings are expected to grow 27.2%.

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