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Why Is Jacobs Solutions (J) Up 5.3% Since Last Earnings Report?
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It has been about a month since the last earnings report for Jacobs Solutions (J - Free Report) . Shares have added about 5.3% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Jacobs Solutions due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Jacobs Beats on Q3 Earnings Estimates, Narrows EPS View
Jacobs Solutions, Inc. reported mixed results for third-quarter fiscal 2024 (ended Jun 28, 2024). Earnings surpassed the Zacks Consensus Estimate, but revenues lagged the same. Nonetheless, both earnings and revenues increased on a year-over-year basis.
The quarterly performance is mainly driven by portfolio optimization, focusing on high-growth sectors that emphasize sustainability and infrastructure resilience. This reflects the company's broad-based strength in global infrastructure and sustainability investment. Moreover, gross profit in backlog continued to improve 5.5% year over year, which provides visibility in the fiscal 2024 outlook and beyond.
Meanwhile, the company has narrowed its guidance for fiscal 2024 adjusted earnings per share (EPS).
Detailed Discussion
J reported adjusted EPS of $1.96, which beat the consensus estimate of $1.95 by 0.5%. The reported figure was up 11.4% from the year-ago figure of $1.76 per share.
Jacobs’ total revenues of $4.23 billion missed the consensus mark of $4.38 billion by 3.5% but inched up 1.1% year over year. Adjusted net revenues were also up 0.7% year over year.
Adjusted operating profit grew 6.9% to $386 million from a year ago. The adjusted operating margin of 11.3% expanded 66 basis points (bps) year over year. Adjusted EBITDA increased 10.6% year over year to $392 million, and adjusted EBITDA margin expanded 103 bps year over year to 11.5%.
The backlog at the end of third-quarter fiscal 2024 amounted to $30.6 billion, up from $28.9 billion a year ago. Book-to-bill was 1.29x at the third quarter of fiscal 2024-end.
Segment Details
Revenues in the P&PS segment totaled $2.56 billion, which increased 3.8% year over year. Adjusted net revenues (excluding Pass-Through revenue) were up by 4.8% year over year. Its operating profit grew 12% from the prior-year quarter to $271 million, and the margin improved 95 bps to 15.3%. The backlog at the quarter’s end was $19.28 billion, up from $17.5 billion a year ago.
Revenues in the CMS segment of $1.16 billion decreased 2.9% year over year. The segment’s operating profit was up 1.2% to $100 million from a year ago, with a margin expansion of 35 bps to 8.7%. The backlog at the fiscal third-quarter end was $8.45 billion, up from $8.1 billion a year ago.
Revenues in the DVS segment totaled $222.8 million, which decreased 6.9% year over year. Divergent Solutions’ adjusted net revenues were down 11.2% year over year. Segment operating profit declined 40.4% from the prior-year quarter to $12 million. Its operating margin of 6.4% also fell 315 bps year over year. The backlog at the quarter’s end was $2.52 billion, down from $2.97 billion a year ago.
PA Consulting generated $288.3 million in revenues, up 0.5% from the year-ago quarter period. Its operating profit was $63 million, up 3.3% from a year ago. Its operating margin improved 60 bps year over year to 21.8%. The quarter-end backlog amounted to $369 million, up from $355 million a year ago.
Balance Sheet & Cash Flow
At the fiscal third-quarter end, Jacobs had cash and cash equivalents of $1.21 billion, up from $926.6 million at the fiscal 2023-end (Sep 29, 2023). Long-term debt decreased to $2.09 billion at the fiscal third-quarter end from $2.81 billion at the fiscal 2023-end.
Net cash provided by operating activities totaled $858.1 million in the first nine months of fiscal 2024 compared with $755.4 million in the year-ago period. The free cash flow was $444.9 million during the reported period versus $290.2 million a year ago.
Fiscal 2024 Guidance Updated
Jacobs still expects adjusted EBITDA between $1.54 billion and $1.585 billion, reflecting 9% growth from the previous year, considering the midpoint.
J has narrowed the bottom-line guidance while maintaining the year-over-year growth rate projection at the midpoint. It now anticipates adjusted EPS within $7.85-$8.05 versus $7.80-$8.10 predicted earlier, depicting 10% year-over-year growth at the midpoint.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
Currently, Jacobs Solutions has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Jacobs Solutions has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Jacobs Solutions belongs to the Zacks Technology Services industry. Another stock from the same industry, ADTRAN Holdings (ADTN - Free Report) , has gained 10.9% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
ADTRAN Holdings reported revenues of $225.99 million in the last reported quarter, representing a year-over-year change of -31%. EPS of -$0.24 for the same period compares with $0 a year ago.
ADTRAN Holdings is expected to post a loss of $0.02 per share for the current quarter, representing a year-over-year change of +85.7%. Over the last 30 days, the Zacks Consensus Estimate has changed -10%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for ADTRAN Holdings. Also, the stock has a VGM Score of B.
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Why Is Jacobs Solutions (J) Up 5.3% Since Last Earnings Report?
It has been about a month since the last earnings report for Jacobs Solutions (J - Free Report) . Shares have added about 5.3% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Jacobs Solutions due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Jacobs Beats on Q3 Earnings Estimates, Narrows EPS View
Jacobs Solutions, Inc. reported mixed results for third-quarter fiscal 2024 (ended Jun 28, 2024). Earnings surpassed the Zacks Consensus Estimate, but revenues lagged the same. Nonetheless, both earnings and revenues increased on a year-over-year basis.
The quarterly performance is mainly driven by portfolio optimization, focusing on high-growth sectors that emphasize sustainability and infrastructure resilience. This reflects the company's broad-based strength in global infrastructure and sustainability investment. Moreover, gross profit in backlog continued to improve 5.5% year over year, which provides visibility in the fiscal 2024 outlook and beyond.
Meanwhile, the company has narrowed its guidance for fiscal 2024 adjusted earnings per share (EPS).
Detailed Discussion
J reported adjusted EPS of $1.96, which beat the consensus estimate of $1.95 by 0.5%. The reported figure was up 11.4% from the year-ago figure of $1.76 per share.
Jacobs’ total revenues of $4.23 billion missed the consensus mark of $4.38 billion by 3.5% but inched up 1.1% year over year. Adjusted net revenues were also up 0.7% year over year.
Adjusted operating profit grew 6.9% to $386 million from a year ago. The adjusted operating margin of 11.3% expanded 66 basis points (bps) year over year. Adjusted EBITDA increased 10.6% year over year to $392 million, and adjusted EBITDA margin expanded 103 bps year over year to 11.5%.
The backlog at the end of third-quarter fiscal 2024 amounted to $30.6 billion, up from $28.9 billion a year ago. Book-to-bill was 1.29x at the third quarter of fiscal 2024-end.
Segment Details
Revenues in the P&PS segment totaled $2.56 billion, which increased 3.8% year over year. Adjusted net revenues (excluding Pass-Through revenue) were up by 4.8% year over year. Its operating profit grew 12% from the prior-year quarter to $271 million, and the margin improved 95 bps to 15.3%. The backlog at the quarter’s end was $19.28 billion, up from $17.5 billion a year ago.
Revenues in the CMS segment of $1.16 billion decreased 2.9% year over year. The segment’s operating profit was up 1.2% to $100 million from a year ago, with a margin expansion of 35 bps to 8.7%. The backlog at the fiscal third-quarter end was $8.45 billion, up from $8.1 billion a year ago.
Revenues in the DVS segment totaled $222.8 million, which decreased 6.9% year over year. Divergent Solutions’ adjusted net revenues were down 11.2% year over year. Segment operating profit declined 40.4% from the prior-year quarter to $12 million. Its operating margin of 6.4% also fell 315 bps year over year. The backlog at the quarter’s end was $2.52 billion, down from $2.97 billion a year ago.
PA Consulting generated $288.3 million in revenues, up 0.5% from the year-ago quarter period. Its operating profit was $63 million, up 3.3% from a year ago. Its operating margin improved 60 bps year over year to 21.8%. The quarter-end backlog amounted to $369 million, up from $355 million a year ago.
Balance Sheet & Cash Flow
At the fiscal third-quarter end, Jacobs had cash and cash equivalents of $1.21 billion, up from $926.6 million at the fiscal 2023-end (Sep 29, 2023). Long-term debt decreased to $2.09 billion at the fiscal third-quarter end from $2.81 billion at the fiscal 2023-end.
Net cash provided by operating activities totaled $858.1 million in the first nine months of fiscal 2024 compared with $755.4 million in the year-ago period. The free cash flow was $444.9 million during the reported period versus $290.2 million a year ago.
Fiscal 2024 Guidance Updated
Jacobs still expects adjusted EBITDA between $1.54 billion and $1.585 billion, reflecting 9% growth from the previous year, considering the midpoint.
J has narrowed the bottom-line guidance while maintaining the year-over-year growth rate projection at the midpoint. It now anticipates adjusted EPS within $7.85-$8.05 versus $7.80-$8.10 predicted earlier, depicting 10% year-over-year growth at the midpoint.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
Currently, Jacobs Solutions has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Jacobs Solutions has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Jacobs Solutions belongs to the Zacks Technology Services industry. Another stock from the same industry, ADTRAN Holdings (ADTN - Free Report) , has gained 10.9% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
ADTRAN Holdings reported revenues of $225.99 million in the last reported quarter, representing a year-over-year change of -31%. EPS of -$0.24 for the same period compares with $0 a year ago.
ADTRAN Holdings is expected to post a loss of $0.02 per share for the current quarter, representing a year-over-year change of +85.7%. Over the last 30 days, the Zacks Consensus Estimate has changed -10%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for ADTRAN Holdings. Also, the stock has a VGM Score of B.