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Jacobs Wins NaFRA2 Contract to Build Cloud Computing System

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Jacobs Engineering Group Inc. (J - Free Report) has secured a four-year, $10-million National Flood Risk Assessment 2 (NaFRA2) contract from the Environment Agency of England. Jacobs — together with JBA Consulting, and a few industry and academic experts — will integrate its expertise to design and develop a pioneering cloud computing system.

Jacobs will combine flood modelling experience with web technologies and cloud computing to develop a system that will identify and alleviate the risk of flooding, which is affecting more than 5.2 million properties in England.

The NaFRA2 will help the agency produce a comprehensive picture of risk and uncertainty, including core public national flood risk information and data to support flood incidents. The course of work under this project includes national-scale flood modeling, spanning scenarios for different flood defense states, breaching, blockage and climate change. Post completion of the work, the new system will store, process and manipulate input data, as well as manage production.

NaFRA2 will be the world's first cloud-based, interactive national flood risk assessment system. The new system will enable the Environment Agency to manage flood risk more effectively and efficiently.
Exceptional Project Execution Strategy to Support Growth

Jacobs’ P&PS business — which accounted for almost 65% of total revenues — serves clients of broad sectors like water, transportation, building and semiconductors.

On Mar 5, the company received a technical design and planning advisory services contract from Enfield Council to deliver exceptional infrastructure in Upper Edmonton.

Efficient project execution has been primarily driving Jacobs’ performance over the last few quarters. The company’s ongoing contract wins are a testimony to the fact. Backlog at the end of second-quarter fiscal 2020 grew 12.5% from the year-ago period.

Our Take

Jacobs’ shares have outperformed the industry so far this year. The outperformance is likely to continue in the near term, buoyed by strong backlog, inorganic moves, its transformed portfolio, and increased focus on infrastructure, aerospace, cybersecurity and technical building projects.

Although the current market scenario remains unpredictable owing to COVID-19, its long-term outlook for the business remains intact. It projects 3-5% net organic revenue growth through 2021. The top-line growth is expected to be driven by recurring revenues that roughly occupy two-thirds of Jacobs’ total revenues. This will enable the company to reduce overall risks of market volatility. Also, it aims a 125-175 basis-point expansion of adjusted operating margins in the long run. The margin expansion is expected to be driven by a combination of higher-margin backlog, and focus on generating efficiencies through digital and technological solutions.

Zacks Rank

Jacobs — which shares space with AECOM (ACM - Free Report) , KBR, Inc. (KBR - Free Report) and Fluor Corporation (FLR - Free Report) in the same industry — currently carries a Zacks Rank #4 (Sell).

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

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