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Jacobs (JEC) Comfortably Beats on Q4 Earnings, Offers View

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Jacobs Engineering Group Inc. reported solid fourth-quarter fiscal 2017 (ended Sep 29, 2017) results with GAAP earnings of $94.1 million or 78 cents per share compared with $29.6 million or 24 cents per share in the year-earlier quarter. For fiscal 2017, Jacobs recorded net income of $293.7 million or $2.42 per share compared with $210.5 million or $1.73 per share in fiscal 2016.

Adjusted earnings for the reported quarter were $118.3 million or 98 cents per share, compared with $93.1 million or 77 cents per share in the year-ago quarter. Adjusted earnings for the quarter comfortably beat the Zacks Consensus Estimate of 82 cents.

Revenues

Revenues improved to $2,653.9 million from $2,640.6 million in the prior-year quarter. The top line exceeded the Zacks Consensus Estimate of $2,597 million. For fiscal 2017, Jacobs recorded revenues of $10,022.8 million compared with $10,964.2 million in fiscal 2016.

Jacobs Engineering Group Inc. Price, Consensus and EPS Surprise

 

Jacobs Engineering Group Inc. Price, Consensus and EPS Surprise | Jacobs Engineering Group Inc. Quote

Segment Details

Revenues of Petroleum & Chemicals segment came in at $666.1 million, down 2.6% year over year. Aerospace & Technology’s quarterly sales dropped 4.5% to $620.7 million. Industrial’s revenues were down 2.8% year over year to $727.9 million.

However, Buildings & Infrastructure sales climbed 14.7% year over year $639.2 million.

Costs/Margin

Direct cost of contracts, a major expenditure for Jacobs, decreased 1.3% year over year to $2,179.6 million. Gross margin in the reported quarter came in at 17.9% compared with 16.3% in the year-ago quarter. The upside was driven by increased focus on more profit generating businesses and robust project execution.

Selling, general and administrative expenses were up approximately 5.3% year over year to $367.3 million. Operating profit improved to $107 million from $82.8 million in the year-earlier quarter. Operating margin was 4% for the quarter compared with 3.1% in the prior-year quarter.

At the end of the reported quarter, the company’s backlog was record high at $19.8 billion.

Balance Sheet

At the end of fiscal 2017, Jacobs’ cash and cash equivalents were approximately $774.2 million compared with $655.7 million as of Sep 30, 2016. Long-term debt was $235 million compared to $385.3 million as of Sep 30, 2016.

The company’s capital expenditure for the fiscal fourth quarter was $44.5 million compared with $21.3 million in the year-ago quarter.

Outlook

Jacobs aims to generate profitable commercial growth on the back of sound restructuring programs and the latest CH2M buyout. The company also intends to reinforce its business on the back of strategic cost-saving plans and record backlog levels. Based on current market conditions, the company anticipates fiscal 2018 adjusted earnings to lie within the $3.25–$3.60 per share range.  

Zacks Rank & Key Picks

Jacobs currently carries a Zacks Rank #2 (Buy). Some other stocks in the industry worth considering are listed below:

KBR, Inc. (KBR - Free Report) has a long-term earnings growth expectation of 9% and currently flaunts a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Willdan Group, Inc. (WLDN - Free Report) currently sports a Zacks Rank #2 and has an average positive earnings surprise of 44.8% for the last four quarters.

IMI has a long-term earnings growth expectation of 10% and flaunts a Zacks Rank #2.

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