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Why Is Jacobs Engineering (J) Up 1.8% Since Last Earnings Report?
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A month has gone by since the last earnings report for Jacobs Engineering (J - Free Report) . Shares have added about 1.8% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Jacobs Engineering due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Jacobs Q2 Earnings & Revenues Top, View Raised
Jacobs Engineering Group Inc. reported second-quarter fiscal 2021 (ended Apr 2, 2021) results, wherein earnings and revenues beat the Zacks Consensus Estimate, driven by solid project execution. In fact, both the metrics surpassed the consensus mark for the fifth consecutive quarter.
The company’s Chair and CEO Steve Demetriou said, "Our strategic portfolio actions and disciplined execution are delivering continued strong financial results despite headwinds from the pandemic.” He also added. “Our multi-year targeted investments in areas such as environmental resiliency, digitally-enabled infrastructure and space intelligence have now intersected with accelerating global demand.”
Earnings & Revenue Discussion
For the reported quarter, its adjusted earnings of $1.66 per share outpaced the consensus estimate of $1.37 by 21.2%. The figure also improved 19% from the year-ago period.
Jacobs’ revenues totaled $3.55 billion, which surpassed the consensus mark by 1.5% and increased 3.5% year over year. The improvement was driven by healthy segmental performance. Backlog at fiscal second quarter-end amounted to $25.6 billion, up 10% from a year ago.
Segment Details
Revenues from the Critical Mission Solutions segment of $1.31 billion increased 5.3% year over year. Backlog at quarter-end was $9.78 billion, up 7% year over year.
Revenues from the People & Places Solutions segment totaled $2.14 billion, which declined 2% year over year. Backlog at quarter-end was $15.5 billion, up 9.6% year over year.
Meanwhile, PA Consulting contributed $98 million of revenues for the fiscal second quarter. Quarter-end backlog amounted to $280 million.
Margins Profile
For the quarter under review, adjusted gross profit increased 18.4% year over year to $767.2 million.
Adjusted operating margin expanded 200 basis points (bps) to 10.5%.
Balance Sheet & Cash Flow
At fiscal second quarter 2021-end, Jacobs had cash and cash equivalents of $893.3 million, up from $862.4 million at the end of fiscal 2020 (ended Oct 2, 2020). Long-term debt increased to $3.42 billion at fiscal second quarter-end from $1.68 billion as of Oct 2, 2020.
The company provided $237.6 million cash for operating activities in the fiscal second quarter compared with $152.2 million in the year-ago period. It generated free cash flow of $209.3 million in second-quarter fiscal 2021 versus $113.1 million a year ago.
Fiscal 2021 Guidance Raised
Buoyed by first-half fiscal 2021 performance and closing of investment in PA Consulting, Jacobs lifted its adjusted EBITDA and EPS guidance. Jacobs now expects adjusted EBITDA between $1,200 million and $1,270 million compared with the prior estimate of $1,075-$1,155 million. Also, it now anticipates adjusted earnings within $6.00-$6.30 per share compared with the earlier estimate of $5.30-$6.00.
The company expects PA Consulting to generate double-digit revenue growth for the fiscal year. Beyond fiscal 2021, the company expects multiple secular growth drivers and efficiency gains, which in turn are likely to support double-digit earnings growth.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month. The consensus estimate has shifted 11.43% due to these changes.
VGM Scores
At this time, Jacobs Engineering has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Jacobs Engineering has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is Jacobs Engineering (J) Up 1.8% Since Last Earnings Report?
A month has gone by since the last earnings report for Jacobs Engineering (J - Free Report) . Shares have added about 1.8% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Jacobs Engineering due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Jacobs Q2 Earnings & Revenues Top, View Raised
Jacobs Engineering Group Inc. reported second-quarter fiscal 2021 (ended Apr 2, 2021) results, wherein earnings and revenues beat the Zacks Consensus Estimate, driven by solid project execution. In fact, both the metrics surpassed the consensus mark for the fifth consecutive quarter.
The company’s Chair and CEO Steve Demetriou said, "Our strategic portfolio actions and disciplined execution are delivering continued strong financial results despite headwinds from the pandemic.” He also added. “Our multi-year targeted investments in areas such as environmental resiliency, digitally-enabled infrastructure and space intelligence have now intersected with accelerating global demand.”
Earnings & Revenue Discussion
For the reported quarter, its adjusted earnings of $1.66 per share outpaced the consensus estimate of $1.37 by 21.2%. The figure also improved 19% from the year-ago period.
Jacobs’ revenues totaled $3.55 billion, which surpassed the consensus mark by 1.5% and increased 3.5% year over year. The improvement was driven by healthy segmental performance. Backlog at fiscal second quarter-end amounted to $25.6 billion, up 10% from a year ago.
Segment Details
Revenues from the Critical Mission Solutions segment of $1.31 billion increased 5.3% year over year. Backlog at quarter-end was $9.78 billion, up 7% year over year.
Revenues from the People & Places Solutions segment totaled $2.14 billion, which declined 2% year over year. Backlog at quarter-end was $15.5 billion, up 9.6% year over year.
Meanwhile, PA Consulting contributed $98 million of revenues for the fiscal second quarter. Quarter-end backlog amounted to $280 million.
Margins Profile
For the quarter under review, adjusted gross profit increased 18.4% year over year to $767.2 million.
Adjusted operating margin expanded 200 basis points (bps) to 10.5%.
Balance Sheet & Cash Flow
At fiscal second quarter 2021-end, Jacobs had cash and cash equivalents of $893.3 million, up from $862.4 million at the end of fiscal 2020 (ended Oct 2, 2020). Long-term debt increased to $3.42 billion at fiscal second quarter-end from $1.68 billion as of Oct 2, 2020.
The company provided $237.6 million cash for operating activities in the fiscal second quarter compared with $152.2 million in the year-ago period. It generated free cash flow of $209.3 million in second-quarter fiscal 2021 versus $113.1 million a year ago.
Fiscal 2021 Guidance Raised
Buoyed by first-half fiscal 2021 performance and closing of investment in PA Consulting, Jacobs lifted its adjusted EBITDA and EPS guidance. Jacobs now expects adjusted EBITDA between $1,200 million and $1,270 million compared with the prior estimate of $1,075-$1,155 million. Also, it now anticipates adjusted earnings within $6.00-$6.30 per share compared with the earlier estimate of $5.30-$6.00.
The company expects PA Consulting to generate double-digit revenue growth for the fiscal year. Beyond fiscal 2021, the company expects multiple secular growth drivers and efficiency gains, which in turn are likely to support double-digit earnings growth.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month. The consensus estimate has shifted 11.43% due to these changes.
VGM Scores
At this time, Jacobs Engineering has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Jacobs Engineering has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.