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In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 6% but revenues missed the same by 5.3%. On a year-over-year basis, earnings of this leading provider of professional, technical and construction services were down 3% (given a lower tax rate impact of 17 cents in the year-ago period) but revenues grew 1.9%.
Jacobs’ earnings topped the consensus mark in the last four quarters, with the average being 12.7%.
Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has decreased to $1.60 from $1.61 over the past seven days. Nonetheless, the estimated figure indicates a 13.5% increase from $1.41 per share reported in the year-ago quarter. The consensus mark for revenues is pegged at $3.64 billion, suggesting 7.7% growth from the year-ago reported figure of $3.38 billion.
Jacobs Engineering Group Inc. Price and EPS Surprise
Investments from the U.S. Infrastructure Act and other economic stimuli are expected to have aided Jacobs in first-quarter fiscal 2022. Also, Jacobs’ strategic focus on transforming itself from an engineering and construction to a global technology-forward solutions company is expected to reflect on fiscal first-quarter results. Also, higher-margin backlog, focus on generating efficiencies through digital and technological solutions along with solid project execution are expected to have boosted its growth. J has been continuously shifting to digital and leadership in strategic end markets like space exploration, life sciences, cyber as well as water solutions. Again, the U.S. Department of Defense’s increased focus on strategic data utilization is likely to have driven Jacobs’ growth.
Meanwhile, a favorable revenue mix in both People & Places Solutions or P&PS and Critical Mission Solutions or CMS segments as well as benefits from PA Consulting (which has a strong accretive gross margin profile of nearly 50%) are expected to have reflected in margins.
Jacobs expects mid-single-digit revenue growth for first-quarter fiscal 2022, with the figure likely to accelerate in the second half of the fiscal year.
Segment-wise, higher spending from the transportation sector and accelerated investments toward drinking water, wastewater, flood protection as well as climate resilience might have aided the company’s fiscal first-quarter performance in the People & Places Solutions or P&PS segment (comprising 60% of total revenues). Rapid implementation of digital technologies has been optimizing clients’ operational spending and mitigating their revenue challenges. Further, environmental and green economy projects remained strong.
The Zacks Consensus Estimate for the P&PS segment’s net revenues is pegged at $2,058 million, indicating a decrease from $2,086.5 million a year ago. Meanwhile, the Zacks Consensus Estimate for the P&PS segment’s operating profit is pegged at $191 million, indicating a decline from the year-ago figure of $196 million.
The Critical Mission Solutions or CMS segment (comprising 36% of total revenues) is expected to have benefited from consistently strong performance of the Cyber and Mission-IT business. The company’s CMS strategy has been focused on creating resilient revenue growth and margin expansion by offering technology-enabled solutions aligned to critical national priorities that drive innovative outcomes. Jacobs has been pursuing global energy transition, space-based ISR, intelligence analytics and 5G networks.
For the fiscal first quarter, Jacobs expects revenues for CMS to decline slightly on a year-over-year basis, with underlying growth being much stronger.
The Zacks Consensus Estimate for the CMS segment’s revenues is pegged at $1,282 million, indicating a decline from $1,295 million a year ago. The consensus mark for the CMS segment’s operating profit is $109 million, suggesting a decline from $110 million a year ago.
Meanwhile, it expects non-allocated corporate costs to reflect on the quarterly results due to an increase in medical costs, IT investments and other expenses.
Jacobs also expects the potential non-cash impairment charge to reflect on quarterly earnings.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Jacobs for the quarter to be reported. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here, as you will see below.
Earnings ESP: Jacobs has an Earnings ESP of -1.40%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some companies in the Zacks Construction sector, which according to our model have the right combination of elements to post an earnings beat in their respective quarters to be reported.
Boise Cascade Company (BCC - Free Report) has an Earnings ESP of +9.09% and a Zacks Rank #1.
Shares of Boise Cascade have gained 63% over the past year. BCC’s earnings topped the consensus mark in all the last four quarters, with the average being 45.5%.
Louisiana-Pacific Corporation (LPX - Free Report) has an Earnings ESP of +1.08% and a Zacks Rank #1.
Shares of Louisiana-Pacific have gained 69.8% over the past year. LPX’s earnings topped the consensus mark in all the last four quarters, with the average being 10.5%.
Martin Marietta Materials, Inc. (MLM - Free Report) has an Earnings ESP of +1.40% and a Zacks Rank #3.
Shares of MLM have gained 31.1% over the past year. In the trailing four quarters, MLM’s earnings topped the consensus mark twice but missed the same on the other two occasions, with the average surprise being 33.4%.
Image: Bigstock
What to Expect From Jacobs (J) This Earnings Season
Jacobs Engineering Group Inc. (J - Free Report) is slated to report first-quarter fiscal 2022 results on Feb 8, before the opening bell.
In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 6% but revenues missed the same by 5.3%. On a year-over-year basis, earnings of this leading provider of professional, technical and construction services were down 3% (given a lower tax rate impact of 17 cents in the year-ago period) but revenues grew 1.9%.
Jacobs’ earnings topped the consensus mark in the last four quarters, with the average being 12.7%.
Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has decreased to $1.60 from $1.61 over the past seven days. Nonetheless, the estimated figure indicates a 13.5% increase from $1.41 per share reported in the year-ago quarter. The consensus mark for revenues is pegged at $3.64 billion, suggesting 7.7% growth from the year-ago reported figure of $3.38 billion.
Jacobs Engineering Group Inc. Price and EPS Surprise
Jacobs Engineering Group Inc. price-eps-surprise | Jacobs Engineering Group Inc. Quote
Factors to Note
Investments from the U.S. Infrastructure Act and other economic stimuli are expected to have aided Jacobs in first-quarter fiscal 2022. Also, Jacobs’ strategic focus on transforming itself from an engineering and construction to a global technology-forward solutions company is expected to reflect on fiscal first-quarter results. Also, higher-margin backlog, focus on generating efficiencies through digital and technological solutions along with solid project execution are expected to have boosted its growth. J has been continuously shifting to digital and leadership in strategic end markets like space exploration, life sciences, cyber as well as water solutions. Again, the U.S. Department of Defense’s increased focus on strategic data utilization is likely to have driven Jacobs’ growth.
Meanwhile, a favorable revenue mix in both People & Places Solutions or P&PS and Critical Mission Solutions or CMS segments as well as benefits from PA Consulting (which has a strong accretive gross margin profile of nearly 50%) are expected to have reflected in margins.
Jacobs expects mid-single-digit revenue growth for first-quarter fiscal 2022, with the figure likely to accelerate in the second half of the fiscal year.
Segment-wise, higher spending from the transportation sector and accelerated investments toward drinking water, wastewater, flood protection as well as climate resilience might have aided the company’s fiscal first-quarter performance in the People & Places Solutions or P&PS segment (comprising 60% of total revenues). Rapid implementation of digital technologies has been optimizing clients’ operational spending and mitigating their revenue challenges. Further, environmental and green economy projects remained strong.
The Zacks Consensus Estimate for the P&PS segment’s net revenues is pegged at $2,058 million, indicating a decrease from $2,086.5 million a year ago. Meanwhile, the Zacks Consensus Estimate for the P&PS segment’s operating profit is pegged at $191 million, indicating a decline from the year-ago figure of $196 million.
The Critical Mission Solutions or CMS segment (comprising 36% of total revenues) is expected to have benefited from consistently strong performance of the Cyber and Mission-IT business. The company’s CMS strategy has been focused on creating resilient revenue growth and margin expansion by offering technology-enabled solutions aligned to critical national priorities that drive innovative outcomes. Jacobs has been pursuing global energy transition, space-based ISR, intelligence analytics and 5G networks.
For the fiscal first quarter, Jacobs expects revenues for CMS to decline slightly on a year-over-year basis, with underlying growth being much stronger.
The Zacks Consensus Estimate for the CMS segment’s revenues is pegged at $1,282 million, indicating a decline from $1,295 million a year ago. The consensus mark for the CMS segment’s operating profit is $109 million, suggesting a decline from $110 million a year ago.
Meanwhile, it expects non-allocated corporate costs to reflect on the quarterly results due to an increase in medical costs, IT investments and other expenses.
Jacobs also expects the potential non-cash impairment charge to reflect on quarterly earnings.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Jacobs for the quarter to be reported. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here, as you will see below.
Earnings ESP: Jacobs has an Earnings ESP of -1.40%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: It currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks With Favorable Combination
Here are some companies in the Zacks Construction sector, which according to our model have the right combination of elements to post an earnings beat in their respective quarters to be reported.
Boise Cascade Company (BCC - Free Report) has an Earnings ESP of +9.09% and a Zacks Rank #1.
Shares of Boise Cascade have gained 63% over the past year. BCC’s earnings topped the consensus mark in all the last four quarters, with the average being 45.5%.
Louisiana-Pacific Corporation (LPX - Free Report) has an Earnings ESP of +1.08% and a Zacks Rank #1.
Shares of Louisiana-Pacific have gained 69.8% over the past year. LPX’s earnings topped the consensus mark in all the last four quarters, with the average being 10.5%.
Martin Marietta Materials, Inc. (MLM - Free Report) has an Earnings ESP of +1.40% and a Zacks Rank #3.
Shares of MLM have gained 31.1% over the past year. In the trailing four quarters, MLM’s earnings topped the consensus mark twice but missed the same on the other two occasions, with the average surprise being 33.4%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.