Jacobs Hikes Dividend, Announces New Share Repurchase Program
In a bid to impress investors, Jacobs Engineering Group Inc. JEC announced a new share buyback authorization and a hike in quarterly dividend to reward its shareholders. These were approved by the company’s board of directors. We believe that such disbursements reflect Jacobs’ shareholder-friendly policies and strong cash position.
Details of Share Buyback & Quarterly Dividend
Jacobs announced a 13.3% hike in its quarterly cash dividend to 17 cents per share. This will result in an annualized dividend of 68 cents. Also, the company’s board of directors recently authorized an additional share buyback program worth $1 billion, which has maximum three-year duration.
The dividend will be payable on Mar 15, 2019 to its shareholders of record as of the close of business on Feb 15, 2019.
Meanwhile, this leading global professional services company expects the divesture of Energy, Chemicals and Resources (“ECR”) business within the first half of the calendar year 2019.
Jacobs remains confident about the ongoing transformation efforts, which will drive its shareholders’ value in the near future. The company has robust prospects across most of the business segments, adding to its growth momentum.
Apart from repurchasing shares and evaluating inorganic investment opportunities, increasing dividend is also a key component of its capital return philosophy. In fiscal 2018, the company paid $86.6 million in dividends, including non-controlling interests of $4.6 million, compared with $58.8 million in fiscal 2017.
Again, since December 2018, the company has repurchased approximately $184 million of the remaining $247 million authorization.
Jacobs has been performing pretty well. It has been generating higher revenues courtesy of ongoing contract wins, increased focus on high-value businesses and efficient project execution. In fiscal 2018, the company’s revenues grew 49.5% from a year ago to $14.98 billion. Higher volumes in all three businesses also added to the positives.
Meanwhile, the company’s backlog at the end of fiscal 2018 was $27.3 billion, increasing 38% year over year.
Share Price Performance
Shares of Jacobs, a Zacks Rank #3 (Hold) company, have outperformed its industry in the past year. The outperformance was backed by the company’s solid earnings surprise history, having surpassed the Zacks Consensus Estimate in the trailing four quarters, with the average being 12.4%.
Also, fiscal 2019 and 2020 earnings are expected to grow 16.6% and 10.3%, respectively. Notably, Jacobs currently flaunts a VGM Score of A.
Stocks to Consider
Some better-ranked stocks in the Zacks Construction sector are Gibraltar Industries, Inc. ROCK, Gates Industrial Corporation plc GTES and Great Lakes Dredge & Dock Corporation GLDD. While Gibraltar sports a Zacks Rank #1 (Strong Buy), Gates Industrial and Great Lakes both carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Gibraltar’s earnings surpassed the consensus estimate in three of the four trailing quarters, with average positive surprise of 11.9%.
Gates Industrial’s 2018 earnings are expected to increase 44.6%.
Great Lakes surpassed earnings estimates in each of the past four quarters, resulting in average positive surprise of 157.5%.
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