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

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Jacobs Engineering Group Inc. (J - Free Report) is slated to report first-quarter fiscal 2021 results on Feb 9, before the opening bell.

In the last reported quarter, the company’s earnings and revenues beat the respective Zacks Consensus Estimate by 25.4% and 4.9%. On a year-over-year basis, earnings and revenues grew 10.1% and 3.7%, respectively, for this leading provider of professional, technical and construction services.

Jacobs’ earnings topped the consensus mark in all the last four quarters, with the average being 15.7%.

Trend in Estimate Revision

For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has been unchanged at $1.25 over the past 30 days. The estimated figure indicates a 4.2% increase from $1.20 per share reported in the year-ago quarter. The consensus mark for revenues is pegged at $3.38 billion, suggesting 0.5% growth from the year-ago reported figure of $3.36 billion.

Factors to Note

Jacobs’ fiscal first-quarter earnings and revenues are expected to have improved from the year-ago period. Its strategic focus on transforming itself from an engineering and construction to a global technology-forward solutions company is expected to reflect on fiscal first-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 relatively flat growth. That said, higher-margin mix in the sales pipeline and lower costs arising from its focus on Focus 2023 initiatives are likely to have aided margins.

The Zacks Consensus Estimate for the P&PS segment’s operating profit is pegged at $182 million, indicating an increase from $178 million a year ago.

Higher spending from the transportation sector and accelerated investments in drinking water, wastewater, flood protection and climate resilience might have aided the company’s fiscal first-quarter performance. Rapid implementation of digital technologies is optimizing clients’ operational spend and mitigating their revenue challenges. Moreover, environmental and green economy projects have remained strong.

The Critical Mission Solutions or CMS segment (comprising 37% of total revenues) is expected to have been hit modestly 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 segment’s operating profit is $93 million, suggesting growth from $90 million a year ago.

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 currently carries a Zacks Rank #2.

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

Stocks Worth a Look

Here are some companies in the Zacks Construction sector, which according to our model have the right combination of elements to post an earnings beat in their respective quarters to be reported.

Floor & Decor Holdings, Inc. (FND - Free Report) has an Earnings ESP of +0.26% and a Zacks Rank #3.

North American Construction Group Ltd. (NOA - Free Report) has an Earnings ESP of +23.81% and a Zacks Rank #2.

Masco Corporation (MAS - Free Report) has an Earnings ESP of +0.17% and a Zacks Rank #3.

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