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In the last reported quarter, the company’s earnings and revenues topped the Zacks Consensus Estimate by 1.7% and 2.1%, respectively. On a year-over-year basis, its earnings rose 5% and revenues grew 5.2%.
The leading provider of professional, technical and construction services’ earnings topped the consensus mark in each of the last four quarters, with the average being 2.1%.
Trend in Estimates
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share (EPS) decreased to $1.84 from $1.87 in the past 30 days. The estimated figure indicates a 1.1% decrease from $1.86 per share reported in the year-ago quarter. The consensus mark for revenues is pegged at $4.1 billion, suggesting 5.8% growth from the year-ago quarter’s reported figure of $3.83 billion.
Jacobs’ third-quarter fiscal 2023 revenues are 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 have reflected in the to-be-reported quarter’s numbers. Also, a higher-margin backlog, focus on generating efficiencies through digital and technological solutions and solid project execution are expected to have boosted growth.
J’s continuous shift to digitalization and leadership in strategic end markets like space exploration, life sciences, cyber and water solutions bode well. 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 (P&PS) and Critical Mission Solutions (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 (58% of total revenues in fiscal 2022).
Rapid implementation of digital technologies has been optimizing clients’ operational spending and mitigating revenue challenges. Further, environmental and green economy projects remain strong.
Our model predicts P&PS segment revenues to increase 12.8% year over year to $1,789.6 million in the quarter. P&PS’s operating profit is expected to grow 17% to $250.4 million from a year ago.
The CMS segment (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.
Our model predicts CMS segment’s revenues to be $1,193.7 million, indicating growth from $1,109 million a year ago. The CMS segment’s operating profit is expected to be $96.9 million, up from $88 million a year ago.
Our model predicts a total backlog of $29.49 billion compared with $28.09 billion reported a year ago. The P&PS segment’s backlog is pegged at $17.69 billion, indicating a rise of 1% from the year-ago quarter’s figure. The same for CMS is pegged at $7.95 billion, indicating 10.5% year-over-year growth.
The company expects non-allocated corporate costs to get reflected in the quarterly performance due to increased medical costs, IT investments and other expenses. Jacobs also expects the potential non-cash impairment charge to reflect on quarterly earnings. Overall, Jacobs expects fiscal third-quarter EPS to be relatively flat sequentially.
What the Zacks Model Says
Our proven model does not conclusively predict 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, this is not the case here.
Earnings ESP: The company has an Earnings ESP of -0.52%. 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 #3.
Stocks With Favorable Combination
Here are some other companies in the Zacks Construction sector, which according to our model, have the right combination of elements to post an earnings beat on their respective quarters to be reported.
AECOM (ACM - Free Report) — a Los Angeles, CA-based company — beat earnings estimates in all the last four quarters, the average surprise being 4.8%. The Zacks Consensus Estimate for AECOM’s fiscal third-quarter earnings is pegged at 95 cents per share, implying growth of 10.5% from the year-ago reported figure.
Willdan Group, Inc. (WLDN - Free Report) has an Earnings ESP of +108.33% and a Zacks Rank #3.
WLDN’s earnings for the to-be-reported quarter are expected to increase 300%. The company reported better-than-expected earnings in two of the last four quarters and missed on two occasions, the average surprise being 1,289.3%.
Dycom Industries, Inc. (DY - Free Report) has an Earnings ESP of +0.12% and a Zacks Rank #3.
DY’s earnings for the to-be-reported quarter are expected to increase by 13.7%. The company reported better-than-expected earnings in the last four quarters, the average surprise being 153.7%.
Image: Bigstock
Jacobs (J) Set to Report Q3 Earnings: What's in the Offing?
Jacobs Engineering Group Inc. (J - Free Report) is slated to report third-quarter fiscal 2023 results on Aug 8, before market open.
In the last reported quarter, the company’s earnings and revenues topped the Zacks Consensus Estimate by 1.7% and 2.1%, respectively. On a year-over-year basis, its earnings rose 5% and revenues grew 5.2%.
The leading provider of professional, technical and construction services’ earnings topped the consensus mark in each of the last four quarters, with the average being 2.1%.
Trend in Estimates
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share (EPS) decreased to $1.84 from $1.87 in the past 30 days. The estimated figure indicates a 1.1% decrease from $1.86 per share reported in the year-ago quarter. The consensus mark for revenues is pegged at $4.1 billion, suggesting 5.8% growth from the year-ago quarter’s reported figure of $3.83 billion.
Jacobs Solutions Inc. Price and EPS Surprise
Jacobs Solutions Inc. price-eps-surprise | Jacobs Solutions Inc. Quote
Factors to Note
Jacobs’ third-quarter fiscal 2023 revenues are 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 have reflected in the to-be-reported quarter’s numbers. Also, a higher-margin backlog, focus on generating efficiencies through digital and technological solutions and solid project execution are expected to have boosted growth.
J’s continuous shift to digitalization and leadership in strategic end markets like space exploration, life sciences, cyber and water solutions bode well. 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 (P&PS) and Critical Mission Solutions (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 (58% of total revenues in fiscal 2022).
Rapid implementation of digital technologies has been optimizing clients’ operational spending and mitigating revenue challenges. Further, environmental and green economy projects remain strong.
Our model predicts P&PS segment revenues to increase 12.8% year over year to $1,789.6 million in the quarter. P&PS’s operating profit is expected to grow 17% to $250.4 million from a year ago.
The CMS segment (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.
Our model predicts CMS segment’s revenues to be $1,193.7 million, indicating growth from $1,109 million a year ago. The CMS segment’s operating profit is expected to be $96.9 million, up from $88 million a year ago.
Our model predicts a total backlog of $29.49 billion compared with $28.09 billion reported a year ago. The P&PS segment’s backlog is pegged at $17.69 billion, indicating a rise of 1% from the year-ago quarter’s figure. The same for CMS is pegged at $7.95 billion, indicating 10.5% year-over-year growth.
The company expects non-allocated corporate costs to get reflected in the quarterly performance due to increased medical costs, IT investments and other expenses. Jacobs also expects the potential non-cash impairment charge to reflect on quarterly earnings. Overall, Jacobs expects fiscal third-quarter EPS to be relatively flat sequentially.
What the Zacks Model Says
Our proven model does not conclusively predict 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, this is not the case here.
Earnings ESP: The company has an Earnings ESP of -0.52%. 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 #3.
Stocks With Favorable Combination
Here are some other companies in the Zacks Construction sector, which according to our model, have the right combination of elements to post an earnings beat on their respective quarters to be reported.
AECOM (ACM - Free Report) — a Los Angeles, CA-based company — beat earnings estimates in all the last four quarters, the average surprise being 4.8%. The Zacks Consensus Estimate for AECOM’s fiscal third-quarter earnings is pegged at 95 cents per share, implying growth of 10.5% from the year-ago reported figure.
ACM has an Earnings ESP of +1.05% and a Zacks Rank #2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Willdan Group, Inc. (WLDN - Free Report) has an Earnings ESP of +108.33% and a Zacks Rank #3.
WLDN’s earnings for the to-be-reported quarter are expected to increase 300%. The company reported better-than-expected earnings in two of the last four quarters and missed on two occasions, the average surprise being 1,289.3%.
Dycom Industries, Inc. (DY - Free Report) has an Earnings ESP of +0.12% and a Zacks Rank #3.
DY’s earnings for the to-be-reported quarter are expected to increase by 13.7%. The company reported better-than-expected earnings in the last four quarters, the average surprise being 153.7%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.