Two More Contracts for Jacobs

Zacks

Series of contract wins continue to boost Jacobs Engineering Group Inc.’s (JEC) spirit as it announced winning of two more strategic contracts. One of the contracts involves an agreement with RailCorp in Sydney, Australia, and the other is derived from Marafiq in Saudi Arabia. The financial terms and conditions of both the contracts have not yet been disclosed.

According to the first contract, the company has been chosen by Rail Corporation New South Wales (RailCorp) to be a part of its Design Review Panel. The company will be engaged in offering various types of design support services to the rail capital projects under the contract. Moreover, it has been noted that the three-year framework agreement has an option of multiple one-year extension.

Jacobs expects that with this deal, it will be able to extend its market coverage in the infrastructure industry in Australia as contract wins such as these amply reflect client confidence in Jacobs in delivering strategic projects.

Per the second agreement, the company will continue rendering its project management contractor (PMC) services to Marafiq’s investment program in The Kingdom of Saudi Arabia. The contract pertains to a one-year extension period.

 Following the contract award, Jacobs looks forward to strengthening its long-term relationship with Marafiq, which, in turn, will enhance the company’s foothold in the Kingdom of Saudi Arabia. Jacobs will be executing the project from its offices in Al Khobar, Saudi Arabia; Winnersh, United Kingdom and Mumbai, India.

Jacobs’ on-time service delivery as well as maintaining its long-term relationships with the existing clientele have been providing an edge over the industry players, such as Fluor Corporation (FLR) and Foster Wheeler AG (FWLT). Moreover, the company’s mounting international exposure through contract wins and diversification have also been raising investor confidence over time.

The current Zacks Consensus Estimates for Jacobs are 80 cents and $2.91 per share for the fourth quarter of fiscal 2012 and fiscal 2012, respectively. We currently have a long-term ‘Neutral’ recommendation on the stock. Moreover, the company maintains a Zacks #3 Rank, which translates into a short-term (1-3 months) ‘Hold’ rating.

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