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Jacobs (JEC) to Design MHF for Sirius Minerals in Teesside

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Jacobs Engineering Group Inc. (JEC - Free Report) has won an engineering, procurement and construction (“EPC”) contract from Sirius Minerals PLC, for its new materials handling facility (“MHF”) in Teesside, U.K.

Jacobs will design the MHF to support seven million tons per annum (“MTPA”) of granulated Polyhalite fertilizer for the first phase of development, with further expansion up to 20 MTPA.

The MHF is part of Sirius Minerals’ North Yorkshire Polyhalite Project. Polyhalite is a unique multi-nutrient mineral, containing four macro-nutrients, namely potassium, sulfur, magnesium and calcium. The MHF will crush the polyhalite ore and granulate it for use in agricultural equipment. Also, the MHF will support three MTPA of coarse product.

As part of this contract, Jacobs will help Sirius Minerals to become a leading global polyhalite producer. Also, the project will create more than 1,000 direct jobs and potentially generate above £2 billion of annual exports for the U.K.

Continuous Contract Wins — A Major Positive

Jacobs secured several renowned contracts over the past few months. On Oct 10, the company received a 12-month contract extension from the Department of Energy for the Aerospace, Technology, Environmental and Nuclear or ATEN business. Also, on Sep 27, its Buildings, Infrastructure and Advanced Facilities (“BIAF”) segment was awarded a contract to serve Rail Projects Victoria as a technical advisor. The ongoing contract wins highlight Jacobs’ efforts to earn high-end and differentiated work.

Meanwhile, its overall backlog, as of Jun 30, 2018, was $27.2 billion, increasing 47% year over year on a reported basis and 8% on a pro-forma basis. The company further expects the trend to continue, driven by strong demand across ATEN and BIAF.

We believe that the recent opportunity will further boost Jacobs’ overall revenues. In the first nine months of fiscal 2018, its revenues totaled $10.84 billion, increasing 47.1% year over year.

Share Price Performance

Shares of Jacobs, a Zacks Rank #3 (Hold) company, have broadly outperformed the industry over a year. Its shares have gained 23.3% against the industry’s decline of 2.6% in the said period. The outperformance was backed by a solid earnings surprise history, having surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with an average of 15.4%.

Stocks to Consider

Some better-ranked stocks from the same industry are Armstrong World Industries, Inc. (AWI - Free Report) , KBR, Inc. (KBR - Free Report) and Altair Engineering Inc. (ALTR - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Armstrong World and Altair’s earnings for 2018 are expected to increase 23.5% and 11.5%, respectively, while KBR’s 2019 earnings are anticipated to grow 12.1%.

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