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5 Factors That Underscore Jacobs' (J) Bullish Prospects
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Jacobs Engineering Group Inc. (J - Free Report) is well poised for growth, given U.S. President Joe Biden’s infrastructure modernization endeavor. Also, its solid backlog level, inorganic moves and efforts to concentrate on high-value business are potent tailwinds.
Shares of this professional, technical, and construction service provider have climbed 21.4% year to date, underperforming the Zacks Engineering - R and D Services industry’s 26.8% rally. That said, fiscal 2021 earnings estimates for this Zacks Rank #2 (Buy) company have moved 0.3% upward over the past seven days. This positive trend signifies bullish analysts’ sentiments, indicating robust fundamentals and the expectation of outperformance in the near term. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Jacobs also has a favorable VGM Score of A. Our research shows that stocks with a VGM Score of A or B, combined with a Zacks Rank #1 or 2, offer the best investment opportunities to investors.
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Let’s delve into the major driving factors.
Biden’s Infrastructural Move
Jacobs, and other construction companies like United Rentals (URI - Free Report) , AECOM (ACM - Free Report) as well as KBR, Inc. (KBR - Free Report) are expected to benefit from strong global trends in infrastructure modernization, energy transition, national security, and a potential super-cycle in global supply chain investments. A significant boost in infrastructural and public construction spending to underscore the need for rebuilding the nation’s deteriorating roads and bridges, and funding new climate resilience and broadband initiatives is a boon for Jacobs.
Focus 2023 Initiative
With Focus 2023 transformative initiative (launched in November 2020), Jacobs aims to realize annual benefits of more than $200 million versus fiscal 2020, giving the company flexibility to materially invest in the business to drive growth through technology-enabled solutions. Through this initiative, it has been accelerating the adoption of digital technology across all facets of operations. This move will include a reduction in physical real estate footprint by more than 30% as it significantly shifts to a more flexible and virtual workforce. Focus 2023 integration/transformation is expected to lead to $110 million of associated cash outflows in fiscal 2021. Also, this is expected to drive double-digit adjusted EBITDA growth in fiscal 2022.
Buyouts
Jacobs has been focusing on inorganic moves to drive growth. In sync with this, on Mar 2, it acquired a 65% interest in PA Consulting — a U.K.-based leading innovation and transformation consulting firm — for $1.7 billion. The remaining 35% interest is held by PA Consulting employees. PA Consulting will be treated as a consolidated subsidiary and a separate operating segment under U.S. GAAP accounting rules. It continues to expect 32-34 cents of adjusted EPS accretion from PA Consulting in fiscal 2021.
Impressive Earnings Surprise History & Earnings Growth Expectation
Jacobs has a solid earnings surprise history. The company surpassed earnings estimates in 14 of the trailing 16 quarters. The trend is expected to continue in the near term, courtesy of its solid performance in third-quarter fiscal 2021.
The company has solid prospects, as is evident from the Zacks Consensus Estimate for fiscal 2021 earnings of $6.22 per share, which indicates 13.5% year-over-year growth.
Higher Return on Equity (ROE)
Jacobs’ trailing 12-month ROE is indicative of growth potential. ROE in the trailing 12 months is 13.8%, much higher than the industry’s 6.7%, reflecting the company’s efficient usage of shareholders’ funds.
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5 Factors That Underscore Jacobs' (J) Bullish Prospects
Jacobs Engineering Group Inc. (J - Free Report) is well poised for growth, given U.S. President Joe Biden’s infrastructure modernization endeavor. Also, its solid backlog level, inorganic moves and efforts to concentrate on high-value business are potent tailwinds.
Shares of this professional, technical, and construction service provider have climbed 21.4% year to date, underperforming the Zacks Engineering - R and D Services industry’s 26.8% rally. That said, fiscal 2021 earnings estimates for this Zacks Rank #2 (Buy) company have moved 0.3% upward over the past seven days. This positive trend signifies bullish analysts’ sentiments, indicating robust fundamentals and the expectation of outperformance in the near term. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Jacobs also has a favorable VGM Score of A. Our research shows that stocks with a VGM Score of A or B, combined with a Zacks Rank #1 or 2, offer the best investment opportunities to investors.
Let’s delve into the major driving factors.
Biden’s Infrastructural Move
Jacobs, and other construction companies like United Rentals (URI - Free Report) , AECOM (ACM - Free Report) as well as KBR, Inc. (KBR - Free Report) are expected to benefit from strong global trends in infrastructure modernization, energy transition, national security, and a potential super-cycle in global supply chain investments. A significant boost in infrastructural and public construction spending to underscore the need for rebuilding the nation’s deteriorating roads and bridges, and funding new climate resilience and broadband initiatives is a boon for Jacobs.
Focus 2023 Initiative
With Focus 2023 transformative initiative (launched in November 2020), Jacobs aims to realize annual benefits of more than $200 million versus fiscal 2020, giving the company flexibility to materially invest in the business to drive growth through technology-enabled solutions. Through this initiative, it has been accelerating the adoption of digital technology across all facets of operations. This move will include a reduction in physical real estate footprint by more than 30% as it significantly shifts to a more flexible and virtual workforce. Focus 2023 integration/transformation is expected to lead to $110 million of associated cash outflows in fiscal 2021. Also, this is expected to drive double-digit adjusted EBITDA growth in fiscal 2022.
Buyouts
Jacobs has been focusing on inorganic moves to drive growth. In sync with this, on Mar 2, it acquired a 65% interest in PA Consulting — a U.K.-based leading innovation and transformation consulting firm — for $1.7 billion. The remaining 35% interest is held by PA Consulting employees. PA Consulting will be treated as a consolidated subsidiary and a separate operating segment under U.S. GAAP accounting rules. It continues to expect 32-34 cents of adjusted EPS accretion from PA Consulting in fiscal 2021.
Impressive Earnings Surprise History & Earnings Growth Expectation
Jacobs has a solid earnings surprise history. The company surpassed earnings estimates in 14 of the trailing 16 quarters. The trend is expected to continue in the near term, courtesy of its solid performance in third-quarter fiscal 2021.
The company has solid prospects, as is evident from the Zacks Consensus Estimate for fiscal 2021 earnings of $6.22 per share, which indicates 13.5% year-over-year growth.
Higher Return on Equity (ROE)
Jacobs’ trailing 12-month ROE is indicative of growth potential. ROE in the trailing 12 months is 13.8%, much higher than the industry’s 6.7%, reflecting the company’s efficient usage of shareholders’ funds.