It has been about a month since the last earnings report for Jacobs Solutions (J Quick QuoteJ - Free Report) . Shares have lost about 6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Jacobs Solutions due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Jacobs Q1 Earnings & Revenues Beat Estimates

Jacobs started fiscal 2025 on a solid note, with its first-quarter fiscal 2025 (ended Dec. 24, 2024) adjusted earnings and revenues surpassed the Zacks Consensus Estimate.

While earnings per share (EPS) declined due to non-recurring tax benefits from the prior year, Jacobs' adjusted EBITDA margin expanded. It continues to see robust demand in the infrastructure and life sciences sectors. Additionally, its capital return program (dividends and share buybacks) remains strong.

Inside Jacobs’ Q1 Results

Jacobs reported adjusted EPS of $1.33, which beat the consensus estimate of $1.29 by 3.1%. The reported figure was, however, down 8.3% from the year-ago figure.

Jacobs’ revenues of $2.932 billion topped the consensus mark of $2.9 billion and grew 4.4% year over year. Adjusted net revenues were also up 5.1% year over year.

Adjusted operating profit grew 24.9% to $277 million from a year ago. Adjusted operating margin expanded 210 basis points (bps) from a year ago to 13.3%. Adjusted EBITDA was $282 million (up 23.6% year over year), with a margin of 13.5% (up from 11.5% a year ago).

Fiscal first-quarter end backlog increased 18.9% year over year to $21.8 billion, underpinned by strong project wins. The book-to-bill ratio was 1.00x in the quarter and 1.3x in the trailing 12-month period, highlighting robust demand and future revenue stability.

Jacobs’ Segment Details

Revenues in the Infrastructure & Advanced Facilities (IA&F) segment totaled $2.92 billion, which increased 4.9% year over year. Adjusted net revenues (excluding Pass-Through revenue) were $1.78 billion, up 6% year over year. Its adjusted operating profit grew 25.6% from the prior-year quarter to $210 million, and the margin improved 185 bps to 11.8%, driven by operational efficiencies and favorable project execution.

The backlog at the quarter’s end was $21.48 billion, up from $18 billion a year ago. The segment achieved strong results from the water and environmental business, which registered strong demand, recording a gross revenue increase of 9.1% year over year. The company secured several high-profile projects, including the Jackson, Mississippi Water Treatment System, which focuses on design, program management, and operations & maintenance. This growth aligns with increased global investments in water resilience and sustainability.

The critical infrastructure segment also delivered robust growth, with gross revenue rising 4.7% year over year.

In contrast, the life sciences and advanced manufacturing sector had a mixed quarter. While life sciences experienced strong growth, advanced manufacturing faced some softness, leading to a marginal 0.7% increase in gross revenue. However, Jacobs secured multiple confidential life sciences projects, indicating a strong pipeline for future growth.

PA Consulting generated $306.7 million in revenues, up 0.2% from the year-ago quarter period. Its adjusted operating profit was $67 million, up 22.6% from a year ago. Its adjusted operating margin improved 396 bps year over year to 21.8%. The quarter-end backlog amounted to $331 million, up from $317 million a year ago.

Jacobs’ Balance Sheet & Cash Flow

At the fiscal first-quarter end, Jacobs had cash and cash equivalents of $1.3 billion, up from $1.14 billion at the fiscal 2024-end (Sept. 27, 2024). Long-term debt increased to $1.72 billion at the fiscal first-quarter end from $1.35 billion at the fiscal 2024-end.

Net cash provided by operating activities totaled $107.5 billion in the fiscal first quarter compared with $418.4 million in the year-ago period. The free cash flow was $97.1 million, down from $401.1 million a year ago.

Fiscal 2025 Guidance for Jacobs

Adjusted net revenue is projected to grow at mid-to-high single digits year over year, with sequential improvements expected quarterly. Adjusted EBITDA margins are forecasted to be in the range of 13.8, indicating continued efficiency improvements.

Adjusted EPS is now expected to be between $5.85 and $6.20 (versus $5.80-$6.20 expected earlier). The company expects more than 100% free cash flow conversion from net income, underscoring strong cash generation capability.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

VGM Scores

At this time, Jacobs Solutions has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Jacobs Solutions has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.