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Jacobs (J) to Hold New Holding Company Structure From Aug 29

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Shares of Jacobs Engineering Group Inc. (J - Free Report) inched up 0.6% on Aug 19 after it unveiled its plan for a new holding company structure from Aug 29.

The company will represent itself as a global technology-forward solutions company. The new name of the parent company, Jacobs Solutions Inc., will replace Jacobs Engineering Group Inc. The internal transaction is intended to be tax-free for Jacobs and its stockholders for U.S. federal income tax purposes. The plan will not affect the ownership of Jacobs' common stock to shareholders.
 
The new name will help strengthen the expansion of J’s business, including engineering and technology-forward products and services. Jacobs has a history of implementing new business plans and strategies.

In November 2020, Jacobs launched the Focus 2023 initiative, with expected benefits of more than $200 million versus fiscal 2020. Through this initiative, the company has been accelerating the adoption of digital technology across all facets of operations. This move will include a reduction in physical real estate footprint by more than 30% as it significantly shifts to a more flexible and virtual workforce. Jacobs expects that by 2023, this transformative initiative — which will provide Jacobs with the flexibility to materially invest in the business — to drive growth through technology-enabled solutions. Focus 2023 integration/transformation is expected to drive double-digit adjusted EBITDA growth in fiscal 2022.

Earlier, in November 2019, this leading engineering firm announced the change of its ticker symbol from JEC to J, with effects from Dec 10, 2019. Also, it launched its new brand globally, which aimed at representing a global technology-driven solutions company from an engineering and construction company.

Stock Performance

J’s shares have outperformed the Zacks Engineering - R and D Services industry in the past six months. The stock gained 15.7% in the said period compared with the industry’s 12.3% rally. Earnings estimates for fiscal 2022 suggest 10.3% year-over-year growth.

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Recently, the company reported third-quarter fiscal 2022 (ended Jul 1, 2022) results. Its earnings and revenues surpassed their respective Zacks Consensus Estimate and improved year over year.

The strong results were mainly attributable to substantial recurring revenues that are complemented by accelerating growth in the areas of Climate Response, Consulting & Advisory and Data Solutions. Moreover, the strategic buyouts and the Focus 2023 initiative will likely accelerate its global integrated delivery of technology-enabled solutions. Going forward, increased focus on fixing the country’s infrastructure will be a boon for Jacobs. The backlog level of $28.1 billion depicts accelerating demand for Jacobs’s consulting services for infrastructure, water, environment, space, broadband, cybersecurity and life sciences.

Zacks Rank & Key Picks

Currently, Jacobs carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some top-ranked stocks, which warrant a look in the Construction sector, include Arcosa (ACA - Free Report) , United Rentals (URI - Free Report) and Primoris Services Corporation (PRIM - Free Report) .

Arcosa — sporting a Zacks Rank #1 — is a manufacturer of infrastructure-related products and services which serves construction, energy and transportation markets.

ACA’s expected earnings growth rate for fiscal 2022 is 7.8%. The Zacks Consensus Estimate for current-year earnings has improved 13.7% over the past 30 days.

United Rentals — currently carrying a Zacks Rank #1 — is the largest equipment rental company in the world.

URI’s expected earnings growth rate for 2022 is 43.5%. The Zacks Consensus Estimate for current-year earnings has improved 6.6% over the past 30 days.

Primoris — a Zacks Rank #2 (Buy) company — is a specialty contractor company operating in the United States and Canada. A robust backlog level of more than $4 billion and solid contract awards in the Energy/Renewables and Utilities segments depict incredible momentum in the future despite the supply chain and permitting challenges. Utility-scale solar projects continued to drive the progress of the Energy/Renewables segment.

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