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Jacobs (J) Gears Up for Q3 Earnings: What's in the Offing?

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Jacobs Engineering Group Inc. (J - Free Report) is slated to report third-quarter fiscal 2022 results on Aug 1, before the market open.

In the last reported quarter, the company’s earnings and revenues topped the Zacks Consensus Estimate by 1.2% and 1.8%, respectively. On a year-over-year basis, its earnings rose 3.6%, and revenues increased 8.1%.

The leading provider of professional, technical and construction services’ earnings topped the consensus mark in three of the last four quarters, with an average of 3.9%.

Trend in Estimates

For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has dropped to $1.83 from $1.85 in the past 30 days. The estimated figure indicates 11.6% decrease from $1.64 per share reported in the year-ago quarter. The consensus mark for revenues is pegged at $3.75 billion, suggesting a 4.9% growth from the year-ago quarter’s reported figure of $3.58 billion.

Factors to Note

Jacobs’ third-quarter fiscal 2022 performance is likely to have been aided by investments from the U.S. Infrastructure Act and other economic stimuli. Its strategic focus on transforming itself from an engineering and construction firm to a global technology-forward solutions company is expected to get reflected in the to-be-reported quarter’s numbers. Also, higher-margin backlog, focus on generating efficiencies through digital and technological solutions and solid project execution are expected to have boosted growth.

J has been continuously shifting to digital and leadership in strategic end markets like space exploration, life sciences and cyber and water solutions. Again, the U.S. Department of Defense’s increased focus on strategic data utilization is likely to have driven Jacobs’ growth.

A favorable revenue mix in both People & Places Solutions or P&PS and Critical Mission Solutions or CMS segments and benefits from PA Consulting (which has a solid accretive gross margin profile of nearly 50%) are likely to get reflected in margins.

Segment-wise, higher spending from the transportation sector and accelerated investments toward drinking water, wastewater, flood protection and climate resilience might have aided the company’s fiscal third-quarter performance in the P&PS segment (comprising 60% of total revenues in fiscal 2021). Rapid implementation of digital technologies has been optimizing clients’ operational spending and mitigating their revenue challenges. Further, environmental and green economy projects remained strong.

The Zacks Consensus Estimate for the P&PS segment’s net revenues is pegged at $1,581 million, indicating a decrease from $2,103 million a year ago. That said, the Zacks Consensus Estimate for the P&PS segment’s operating profit is pegged at $217 million, indicating a rise from the year-ago quarter’s figure of $205 million.

The Critical Mission Solutions or CMS segment (comprising 36% of total revenues) is expected to have benefited from the consistent performance of the Cyber and Mission-IT business. The company’s CMS strategy has been focused on creating resilient revenue growth and margin expansion by offering technology-enabled solutions aligned to critical national priorities that drive innovative outcomes. Jacobs has been pursuing global energy transition, space-based ISR, intelligence analytics and 5G networks.

For the fiscal third quarter, Jacobs expects revenues for CMS to grow strongly on a year-over-year basis, with underlying growth being much stronger. The Zacks Consensus Estimate for the CMS segment’s revenues is pegged at $1,354 million, indicating growth from $1,218 million a year ago. The consensus mark for the CMS segment’s operating profit is $124 million, up from $108 million a year ago.

It expects non-allocated corporate costs to get reflected in the quarterly performance due to increased medical costs, IT investments and other expenses.

What the Zacks Model Says

Our proven model does not conclusively predicts an earnings beat for Jacobs this time around. A 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. Unfortunately, that is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The company has an Earnings ESP of -1.91%.

Zacks Rank: It currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Recent Construction Releases

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URI also lifted its full-year guidance for total revenues, adjusted EBITDA and free cash flow, given broad-based end-market activity, contractor backlogs, customer sentiment and our visibility through the balance of the year.

NVR, Inc.’s (NVR - Free Report) second-quarter 2022 earnings missed the Zacks Consensus Estimate, but revenues surpassed the same.

The company reported earnings of $123.65 per share, increased 50% from the prior-year figure of $82.45 per share. Total revenues (Homebuilding & Mortgage Banking fees combined) amounted to $2.66 billion for the reported quarter, reflecting growth of 16% on a year-over-year basis. Higher average price of settlements in the quarter and lower lumber prices led to the year-over-year improvement.

PulteGroup Inc. (PHM - Free Report) reported mixed results for second-quarter 2022, with earnings surpassing the Zacks Consensus Estimate but revenues missing the same.

Earnings for PHM grew 58.7%, from $1.72 per share a year ago. Revenues increased 16.9% from the year-ago figure of $3.36 billion.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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