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Jacobs (JEC) Wins 1-Year ATOM Contract Extension from NASA

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Jacobs Engineering Group Inc. (JEC - Free Report) has received a contract extension from NASA to provide aerospace testing, and facility operations and services at NASA’s Research Center in Mountain View, CA.

The Aerospace Testing and Facility Operation and Maintenance IV (“ATOM”) contract is now extended through February 2020. This brings the total contract value to $178 million.

Per the deal, Jacobs will continue supporting NASA Ames Research Center for operation, maintenance, repair and management of arc jets, wind tunnels, hypersonic facilities, and ballistics complexes. Further, these services will help the Aeronautics Research Mission directorate, Space Launch System and Orion Multi-Purpose Crew Vehicle, along with commercial and other government organizations.

Jacobs has been assisting NASA over the past 20 years. With this latest contract extension, it will continue to offer advanced R&D, scientific and technical solutions through Aerospace, Technology and Nuclear (ATN) line of business.

Recent ATN Contract Wins

On Mar 20, 2019, Jacobs clinched a deal from the U.S. Army Intelligence Center of Excellence (USAICoE) to train, develop and support the Army and other Department of Defense agencies at Fort Huachuca.

Per the contract, Jacobs will provide intelligence-related military occupational specialties and professional development educational services. The contract is valued at $785 million across seven and half years, if all options are exercised. It will provide the-above mentioned services at Davis Monthan AFB in Tucson, AZ; Corry Naval Station in Pensacola, FL; and Goodfellow AFB in San Angelo, TX.

Efficient project execution has been one of the main characteristics driving Jacobs’ performance over the last few quarters. This is evident from the company’s fiscal first-quarter 2019 backlog. Backlog (excluding discontinued business ECR) grew 8% year over year to $20.3 billion. Higher-margin ATN and Buildings, Infrastructure and Advanced Facilities (BIAF) line of businesses continue to see a robust pipeline of government and infrastructure-spending programs.

Notably, the ATN business (contributing 33.6% revenues in the fiscal first quarter) reported revenues of $1,035 million, increasing an impressive 45.6% year over year. Backlog in the segment also increased 7.8% from the prior-year quarter to $7.2 billion. The company projects three-year net organic revenues to witness a 3-5% CAGR, with a CAGR of 2-3% for ATN.

Share Price Performance

Jacobs’ shares have outperformed its industry over the past three months. The company’s shares have gained 33.7% compared with 32.2% growth of its industry in the said period. The price performance is backed by an impressive earnings surprise history, having surpassed the Zacks Consensus Estimates in six of the trailing seven quarters.



 

Zacks Rank & Stocks to Consider

Currently, Jacobs carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Zacks Construction sector include Quanta Services, Inc. (PWR - Free Report) , Apergy Corp. (APY - Free Report) , and Armstrong World Industries, Inc. (AWI - Free Report) . While Quanta Services and Apergy sport a Zacks Rank #1 (Strong Buy), Armstrong World carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Quanta Services and Armstrong World’s earnings for the current year are expected to increase 4.3% and 12.6%, respectively.

Apergy has a solid three-five year expected EPS growth rate of 22.5%.

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