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Jacobs (J) Wins UK's Nuclear Regulator Contract, Aids Backlog

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Jacobs Engineering Group Inc. (J - Free Report) won a four-year U.K.'s nuclear regulator contract to provide specialist engineering and technical support services to the Office for Nuclear Regulation (ONR). The framework includes the ONR's activities in new construction, power generation, decommissioning and defense.

For more than 20 years, Jacobs has supported the regulator with technical safety advice and assessment. The new contract reflects J’s successful track record and technical experience.

Jacobs’ Energy, Security & Technology’s senior vice president, Karen Wiemelt, said, "Our understanding of existing power plants and close involvement with new developments in fission and fusion power is especially valuable to the regulator while the nuclear industry is expanding to deliver energy independence and security, furthering the U.K.'s aim to become a net-zero carbon economy by 2050."

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Although on Dec 8, J’s shares slipped 0.67%, it has outperformed the Zacks Engineering - R and D Services industry in the past three months. Earnings estimates for fiscal 2023 suggest 6.9% year-over-year growth.

Solid Project Execution to Drive Growth

Jacobs is witnessing a rising demand for infrastructure, water, environment, space, broadband, cybersecurity and life sciences consulting services. Recently, it received an energy contract from the United Kingdom Atomic Energy Authority (UKAEA) to support its fusion energy research program. J has been appointed to all lots of the new Plant Maintenance and Operational Support Services (PMOSS) framework.

Over the decades, it has supported the UKAEA-managed Joint European Torus and ITER. Growth in fusion research is creating new opportunities for Jacobs' engineers in various disciplines, including electrical, control and instrumentation, process plants, mechanical, chemical and nuclear and for scientists specializing in chemistry, physics and materials.

Efficient project execution has been a primary factor driving Jacobs’ performance over the last few quarters. The company’s solid backlog level is a testimony to this fact. At the end of the fiscal fourth quarter, J reported a backlog of $27.9 billion, up 5% year over year. This reflects the persistent and solid demand for Jacobs' consulting services.

Of this backlog, Critical Mission Solutions (CMS) accounted for $10.56 billion, slightly down from a year-ago figure. Despite a slight decrease in backlog, the segment benefits from well-funded government programs as well as cyber, U.S. Department of Defense (DoD), mission-IT, space, nuclear and 5G-related projects.

People & Places Solutions’ (P&PS) backlog at fiscal third quarter-end was $17 billion, up from $15.74 billion a year ago. The P&PS segment’s overall sales pipeline has increased as both life sciences and electronics customers have moved forward with previously paused projects.

Jacobs’ Focus 2023 initiative entails more than $200 million in benefits versus fiscal 2020. Jacobs expects that by 2023, its transformative initiative, which will provide Jacobs with the flexibility to materially invest in the business, will drive growth through technology-enabled solutions.

Zacks Rank & Key Construction 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 better-ranked stocks in the Zacks Construction sector are CRH plc (CRH - Free Report) , Janus International Group, Inc. (JBI - Free Report) and United Rentals, Inc. (URI - Free Report) , each carrying a Zacks Rank #2 (Buy).

CRH manufactures cement, concrete products, aggregates, roofing, insulation and other building materials.

CRH’s expected earnings growth rate for 2022 is 22.1%. The Zacks Consensus Estimate for current-year and next-year earnings has improved to $3.98 and $3.43 per share from $3.46 and $3.42, respectively, over the past 30 days.

Headquartered in Temple, GA, Janus manufactures and supplies turn-key self-storage and commercial and industrial building solutions. Solid backlog levels, an impressive project pipeline, productivity improvements and commercial actions, including pricing, are expected to drive growth. The company is expected to benefit from its one-stop-shop offering with a leading market share position in self-storage doors and related design and installation services.

Janus’ earnings for 2022 are expected to rise 21%. The Zacks Consensus Estimate for current-year and next-year earnings has improved to 75 cents and 88 cents per share from 69 cents and 80 cents, respectively, over the past 30 days.

United Rentals is the largest equipment rental company in the world, with an integrated network of 1,390 rental locations in the United States, Canada and Europe.

URI’s expected earnings growth rates for 2022 and 2023 are 47.3% and 12.5%, respectively. The Zacks Consensus Estimate for current-year and next-year earnings has improved to $32.50 and $36.57 per share from $32.41 and $36.27, respectively, over the past 30 days.

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