Jacobs Solutions Inc. (J Quick QuoteJ - Free Report) is well positioned as it heads into fiscal 2026, supported by a record backlog, steady demand across key end markets and clear margin momentum. The company exited fiscal 2025 with a fourth-quarter adjusted EBITDA margin of 14.4% — its highest level yet — reflecting strong cost discipline, a richer mix of higher-value work and increasing use of digital and AI-driven tools. Management expects this progress to continue, outlining another 50-80 basis points of margin improvement in fiscal 2026.

Jacobs’ broad capabilities across digital solutions, advanced manufacturing, critical infrastructure and public-sector advisory services — combined with notable contract wins — continue to reinforce its market position. These strengths create solid tailwinds for the business and support a long-term growth profile that remains attractive for shareholders.

Shares of this global provider of professional, technical and construction services have gained 1.1% in the year-to-date period, outperforming the Zacks Building Products - Miscellaneous industry’s 2.1% decline. Its earnings per share (EPS) topped the Zacks Consensus Estimate in all the trailing four quarters, the average being 3.3%.

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However, the company faces near-term pressures, including seasonal margin effects, temporary free cash flow headwinds and softness in the environmental market.

Jacobs — a Zacks Rank #3 (Hold) stock — has a VGM Score of C. Let’s delve deeper.

Factors Fueling Growth of Jacobs Stock

Backlog Strength: Jacobs’ focus on project execution across key sectors, including life sciences and infrastructure to water, environmental services and advanced technology, bodes well. The company ended fiscal 2025 with a record backlog of $23.1 billion, up 6% year over year, reinforcing the depth of its market momentum. A trailing 12-month book-to-bill ratio of 1.1x further reflects solid project awards and consistent pipeline conversion.

Recent wins also highlight the breadth of Jacobs’ portfolio. The company extended its operational intelligence partnership with United Utilities in the U.K. through 2030, leveraging its AI-powered Aqua DNA platform to enhance utility performance. Jacobs and PA Consulting were also appointed to the U.K. Crown Commercial Service’s Management Consultancy Framework, broadening their role in advancing clean, smart public infrastructure. In the United States, the company secured a major transportation award from the New York MTA to deliver the Interborough Express light rail project, aimed at improving connectivity and supporting sustainable growth across Brooklyn and Queens.

International Expansion Across Key Markets: Jacobs is expanding its global footprint with strong momentum across Europe, the Middle East, Australia and Southeast Asia. The Middle East continues to post double-digit growth, driven by major infrastructure and transportation programs, including New Murabba and emerging opportunities in Abu Dhabi and Etihad Rail. Transportation demand in both the Middle East and Australia remains particularly strong, while Europe is showing steady recovery supported by increased activity in transportation and public-sector consulting. Australia and New Zealand also benefit from solid investment in water and mobility infrastructure. Despite this broad global strength, the United States remains Jacobs’ strongest market.

Enough Liquidity: At the fiscal fourth-quarter 2025 end, Jacobs had cash and cash equivalents of $1.24 billion, up from $1.14 billion at fiscal 2024-end (Sept. 27, 2024). Long-term debt increased to $2.24 billion from $1.35 billion at fiscal 2024-end. Nonetheless, cash flow from operations totaled $687 million, and free cash flow reached $607 million. The company returned a record $1.1 billion to its shareholders, including $754 million in share repurchases and dividends. That said, J has no short-term debt to meet as of Sept. 26, 2025.

Factors Hindering Growth of Jacobs Stock

Seasonal Margin Softness in Early Fiscal 2026: The company noted that fiscal first-quarter 2026 margins will reflect typical seasonal patterns. Higher fringe-related costs, including medical insurance and health benefits, tend to accumulate at the start of the fiscal year and temporarily weigh on profitability before easing in subsequent quarters. This dynamic, coupled with holiday timing, is expected to result in a sequential margin decline in the fiscal first quarter. While management anticipates improvement as the year progresses, the early-year pressure could limit near-term operating momentum.

Free Cash Flow to Absorb One-Time Costs: Jacobs also highlighted factors that will influence its free cash flow outlook for fiscal 2026. Management noted that a one-time tax item tied to non-operating matters would impact the year’s results. In addition, the company anticipates cash expenses related to the pending decision surrounding its ownership position in PA Consulting, a process expected to conclude by March 2026. Both items are incorporated into the company’s free cash flow guidance and contribute to a less favorable year-over-year comparison.

Environmental Business Remains a Soft Spot: While several of Jacobs’ major end markets show healthy demand, the environmental portion of the Water & Environmental segment remains an area of relative softness. Management explained that regulatory volatility is prompting some private-sector clients — particularly in industrial and chemical categories — to delay spending decisions. At the same time, changes in FEMA and disaster-relief funding processes have slowed the pace of awards for certain public-sector programs. Although the company expects conditions to stabilize, the path to recovery depends on improved regulatory clarity and the reactivation of state and federal funding flows.

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