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Jacobs (JEC) Wins Tyndall Air Force Base Support Contract

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Jacobs Engineering Group Inc. (JEC - Free Report) received a contract as a subconsultant to KBR, Inc. (KBR - Free Report) . The company will support and advance the redevelopment of Tyndall Air Force Base in Florida that sustained a direct hit from Category 5 Hurricane Michael. It aims to restore full operational capability of the installation to serve as the prototype for Installation of the Future (IotF).

Jacobs’ key services for the contract, via its Buildings, Infrastructure and Advanced Facilities or BIAF line of business include robust cybersecurity, SMART ownership systems, high-performance buildings, resilient and redundant energy systems, high wind load structural solutions as well as resilient utility systems. Additionally, the company will update the installation's standards and make it consistent with IotF requirements, develop a master program schedule, conduct analysis for delivery methods as well as prepare reoccurring risk and opportunity planning to support the Project Management Office's efforts.

The company has been engaged in zone development plans along with 42 program requirement packages as part of $2.8-billion military construction funding request to Congress.


BIAF Line of Business – Key Growth Driver

Revenues from the BIAF segment totaled $2,013.1 million in the third quarter of fiscal 2019, up 5.3% year over year and contributing 63.5% to revenues. Segment backlog at the end of the quarter was roughly $14 billion, up 10.4% year over year. Along with the latest contract, the BIAF unit is expected to continue to address environmental requirements and expectations.

Efficient project execution has been one of the primary drivers of Jacobs’ performance in the past few quarters. The company’s ongoing contract win is a testimony to the fact. The company’s total backlog at the end of the fiscal third quarter was $22.5 billion, up 8% year over year. Meanwhile, the Aerospace, Technology and Nuclear (ATN) unit’s backlog continued to grow in the third quarter, up 18.3% year over year to $8.5 billion.

The company is projecting 3-5% net organic revenue growth for the next three years (through 2021), with BIAF leading the way with 4-6% top-line CAGR and ATN with 2-3% top-line CAGR. The top line will likely be supported by recurring revenues that roughly occupy two-thirds of Jacobs’ total revenues and reduce overall risks of market volatility.

Price Performance

Owing to major contribution from BIAF and ATN, shares of Jacobs have gained 58.4% year to date compared with the industry’s growth of 20.5% rally. The price performance was backed by an impressive earnings surprise history. The company surpassed earnings estimates in eight of the trailing nine quarters.

 



 

Zacks Rank & Other Stocks to Consider

Jacobs currently carries a Zacks Rank #2 (Buy). Some other top-ranked stocks in the construction sector are Aegion Corporation (AEGN - Free Report) and D.R. Horton, Inc (DHI - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Both Aegion and D.R. Horton have three-five year expected EPS growth rate of 10% and 11%, respectively.

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