Back to top

Image: Bigstock

Jacobs' (J) Shares Rise on Q2 Earnings and Revenue Beat

Read MoreHide Full Article

Jacobs Engineering Group Inc.’s (J - Free Report) shares jumped 8.5% in the after-hour trading session on May 6, post the announcement of second-quarter fiscal 2020 (ended Mar 27, 2020) results. Earnings and revenues beat the respective Zacks Consensus Estimate. Also, the top and bottom lines increased on a year-over-year basis, driven by solid segmental performance and cost-saving initiatives.

Meanwhile, the company has lowered its adjusted EBITDA and EPS guidance for fiscal 2020 owing to COVID-19 impacts.

Jacobs' President and CFO Kevin Berryman said, “Our long-term outlook for the business, despite the short term challenges associated with COVID-19, remains intact and we expect to generate strong free cash flow for the remainder of 2020.”

On Mar 6, 2020, the company acquired John Wood Group's Nuclear consulting, remediation and program management business.

Earnings & Revenue Discussion

During the reported quarter, its adjusted earnings of $1.39 per share topped the consensus estimate of $1.26 by 10.3% and increased 16.8% from the year-ago period. The upsurge was driven by accelerated CH2M cost savings and prudent strategy execution.

Jacobs Engineering Group Inc Price, Consensus and EPS Surprise

Jacobs’ revenues totaled $3.43 billion, which surpassed the consensus mark of $3.12 billion by 9.9% and grew 10.9% year over year. The improvement was driven by healthy segmental performance.

Backlog at fiscal second quarter-end totaled $23.3 billion, up 12.5% from a year ago.

Segment Details

Revenues from the Critical Mission Solutions segment of $1.24 billion increased 17.4% year over year. Backlog at the end of the quarter was $9.1 billion, up 25.4% year over year.

Revenues from the People & Places Solutions segment totaled $1.54 million, which increased 7.5% year over year. Revenues, excluding pass through revenues, also grew 10.2% from the year-ago period. Backlog at the end of the quarter was $14.2 billion, up 5.4% year over year.

Margins Profile

In the quarter under review, adjusted gross profit increased 5.7% year over year to $648 million. However, adjusted gross margin contracted 160 basis points (bps).

Adjusted operating profit improved 6.7% year over year to $236.5 million. However, adjusted operating margin contracted 510 bps to 8.9% in the quarter.

Balance Sheet & Cash Flow

At the end of the fiscal second quarter, Jacobs had cash and cash equivalents of $1.66 billion, significantly up from $631.1 million at fiscal 2019-end. Long-term debt balance increased to $3.1 billion at the end of the reported quarter from $1.2 billion at fiscal 2019-end.

The company provided $$152.2 million cash for operating activities in the quarter compared with $169.5 million a year ago.

2020 Guidance Lowered

Jacobs now expects adjusted EBITDA between $950 million and $1,050 million compared with $1,050-$1,150 million expected earlier. Also, it anticipates adjusted earnings within $4.80-$5.30 per share.

Zacks Rank & Peer Releases

Jacobs — which shares space with Quanta Services, Inc. (PWR - Free Report) in the industry — currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AECOM (ACM - Free Report) reported second-quarter fiscal 2020 results, wherein earnings beat the Zacks Consensus Estimate but revenues missed the same. The company witnessed the sixth consecutive quarter of substantial margin improvement in the Professional Services business, continued double-digit adjusted EBITDA growth, a record $9 billion of wins and a new all-time high backlog level.

KBR, Inc. (KBR - Free Report) reported strong results in first-quarter 2020, with earnings and revenues beating the Zacks Consensus Estimate and improving year over year, given solid growth of the Energy Solutions business.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Quanta Services, Inc. (PWR) - free report >>

AECOM (ACM) - free report >>

KBR, Inc. (KBR) - free report >>

Jacobs Solutions Inc. (J) - free report >>

Published in