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Jacobs (J) to Report Q4 Earnings: What's in the Offing?

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Jacobs Engineering Group Inc. (J - Free Report) is slated to report fourth-quarter fiscal 2020 results on Nov 24, before the opening bell.

In the last reported quarter, the company’s earnings and revenues beat the respective Zacks Consensus Estimate by 27.3% and 3.7%. On a year-over-year basis, earnings declined 10% but revenues of this leading provider of professional, technical and construction services grew 2.9%.

Jacobs’ earnings topped the consensus mark in all the last four quarters, with the average being 13.3%.

Trend in Estimate Revision

For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has been unchanged at $1.30 over the past 30 days. The estimated figure indicates a 12.2% decrease from $1.48 per share reported in the year-ago quarter but growth of 3.2% sequentially. The consensus mark for revenues is pegged at $3.35 billion, suggesting a 1.1% decrease from the year-ago reported figure of $3.39 billion but an improvement of 2.9% sequentially.

Factors to Note

Jacobs’ fiscal fourth-quarter earnings and revenues are expected to have been hit by disruptions caused by the coronavirus outbreak. A temporary disruption from social distancing to nuclear remediation, DoD range operations and commercial businesses, along with project delays and lower infrastructural spending are likely to have impacted its fiscal fourth-quarter performance.

Although the company’s operations might have improved modestly from the fiscal third quarter, it expects a net impact from the COVID-19 pandemic of 35 cents per share in second-half fiscal 2020. Jacobs acknowledged the fact that COVID-19 woes impacted the company in the fiscal fourth quarter and will likely pose challenges in early fiscal 2021.

The company expects $35 million of total charges for the fiscal fourth quarter related to the Energy, Chemicals and Resources or ECR separation. It also expects to incur cost related to the Wood Group Nuclear business buyout, which was carried out in order to achieve synergies and for other non-recurring impacts, for the fiscal fourth quarter.

Nonetheless, its strategic focus on transforming itself from an engineering and construction to a global technology-forward solutions company is expected to reflect on fiscal fourth-quarter results. Also, higher-margin backlog, focus on generating efficiencies through digital and technological solutions, along with solid project execution are expected to have boosted its growth.

Segment-wise, Jacobs’s People & Places Solutions or P&PS segment (comprising 63% of total revenues) is expected to have witnessed delays, and experienced a pressure on public budgets as well as small local and state municipalities.

The Zacks Consensus Estimate for the P&PS segment’s revenues is pegged at $2,030 million, indicating a 0.9% decrease from the fiscal third quarter. The same for backlog indicates a decline of 2.9% sequentially.

The Critical Mission Solutions or CMS segment (comprising 37% of total revenues) is expected to have been hit the most by physical-distancing requirements. Normally stable and recurring enterprise contracts (like DoE remediation and DoD test ranges) have been experiencing limited access to client sites. This is expected to have been partly offset by persistently strong performance of the Cyber and Mission-IT business.

The consensus mark for CMS revenues is $1,315 million, suggesting growth of 8.6% from the last reported quarter. The same for backlog is pegged at $9,157 million, implying a 1% improvement sequentially.

What Our Model Indicates

Our proven model does not conclusively predict an earnings beat for Jacobs this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here, as you will see below.

Earnings ESP: The company has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Jacobs — which shares space with AECOM (ACM - Free Report) , KBR, Inc. (KBR - Free Report) and Altair Engineering Inc. (ALTR - Free Report) in the Zacks Engineering - R and D Services industry — currently carries a Zacks Rank #2.

You can see the complete list of today’s Zacks #1 Rank stocks here.

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