Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Defense deals continue to flow for Jacobs Engineering Group Inc (JEC - Analyst Report). Earlier this week, the company signed a new contract to provide systems engineering and technical assistance (SETA) support to the U.S. Army's Program Executive Office (PEO - ETF report) Soldiers.

The terms of the contract specified that Jacobs will provide effective mission critical support for the PEO Soldiers who develop, acquire, field and sustain integrated and affordable state-of-the-art equipment to improve Soldier dominance in Army operations. The contract carries a one-year base and two one-year extension options and is estimated to bring in $157 million.

As part of the company's core clientele, the U.S. Army and other federal governments have been commanding a significant share for a long time. Such clients have generated substantial revenue for the company, thus ensuring sustainability.

Abiding by such optimism, Robert Norfleet, the Vice President of Jacobs Engineering Group, marked this collaboration as a significant opportunity to strengthen the long-standing liaison with the U.S Army and expects to continue the same.

Prior to this, the last U.S defense task order came to Jacobs was from the Secretary of Air Force Financial Management, Ohio, in late February. Jacobs was selected to provide IT support for Air Force financial applications. Elsewhere, in mid-February Jacobs was chosen as a technical and operations support provider for the Marine Corps Logistics Command in U.S.

Such consistent contract wins from U.S defense services reflect client confidence for Jacobs. Although sustainable, such long-standing associations are not problem-free. Prolonged federal budget constraints or unforeseen termination of government funded projects may drastically reduce order flow, marring profitability.

Fluor Corporation (FLR - Analyst Report) and Foster Wheeler AG (FWLT - Analyst Report), sharing an identically competitive platform like Jacobs, may also face similar challenges. However, Jacobs' recent mix shift toward higher-margin private projects looks convincing enough to guard the company well against such unlikely state of affairs.

We currently have a long-term Neutral recommendation on the stock. Also, the company maintains a Zacks #3 Rank, which implies a short-term (1-3 months) Hold rating.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GROUP DXYN 15.84 +7.90%
BOFL HOLDING BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%