Jacobs (J) & North Wind JV Wins $6.4B Idaho Cleanup Project
The joint venture (JV) between Jacobs Engineering Group Inc. J and North Wind Portage Inc. has won a 10-year contract for the U.S. Department of Energy or DOE's Idaho Cleanup project or ICP.
Under this indefinite-delivery/indefinite-quantity contract valued at $6.4 billion, the companies will accomplish nuclear waste cleanup and storage at the U.S. Energy Department or DOE’s Idaho National Laboratory Site. Contract work involves integrated waste treatment unit operations, spent nuclear fuel management, waste disposition, facility decontamination and decommissioning, environmental remediation along with facility infrastructure support services.
Jacobs has been supporting the DOE Office of Environmental Management’s mission at ICP since 2005. Jacobs Critical Mission Solutions (CMS) SVP, North American Nuclear Karen Wiemelt said, "Jacobs welcomes the opportunity to partner with DOE to advance the restoration of the ICP to beneficial re-use for the INL and Idaho Falls community."
A Look at CMS’ Prospects
CMS (representing 36.6% of fiscal 2020 total revenues) serves global automotive, aerospace, telecommunications, defense, and nuclear clients as well as the U.S. intelligence community.
Revenues from the CMS segment of $1.31 billion for second-quarter fiscal 2021 increased 5.3% year over year. CMS backlog grew 7% year over year and 6% on a pro-forma basis to $9.8 billion for the fiscal second quarter, which provided a strong visibility into the base business. The company’s overall 18-month qualified new business pipeline of more than $30 billion remains robust. This segment is benefiting from well-funded government programs and cyber, U.S. Department of Defense or DoD, mission-IT, space, nuclear as well as 5G-related projects.
Share Price Performance
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Shares of Jacobs have gained 23.4% over the past three months, outperforming the Zacks Engineering - R and D Services industry’s 16.8% rally. The upside can be attributed to an impressive earnings surprise history. The company surpassed earnings estimates in 13 of the trailing 15 quarters. The trend is expected to continue in the near term, courtesy of its solid first-half fiscal 2021 and fiscal 2020 results, despite disruptions caused by the COVID-19 outbreak.
Given the strong momentum, Jacobs lifted its adjusted EBITDA and EPS guidance during fiscal second-quarter earnings call. Earnings for the current year are expected to increase 11.7% from the fiscal 2020 level.
Zacks Rank & Other Key Picks
Jacobs currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the same space include AECOM ACM, Gates Industrial Corporation PLC GTES and Mayville Engineering Company, Inc. MEC, each carrying the same rank as Jacobs. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AECOM, Gates Industrial and Mayville Engineering’s earnings for the current year are expected to grow 27%, 82.9% and 280.6%, respectively.
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