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Jacobs (JEC) Secures IDIQ Contracts From FBI in Washington DC

Zacks Equity Research

Jacobs Engineering Group Inc. JEC has won two indefinite delivery, indefinite quantity (“IDIQ”) contracts from the Federal Bureau of Investigation (“FBI”) to offer architectural, engineering and planning services for one base year and four option years.

The FBI has awarded a pair of multiple-award contracts for the above-mentioned services for the bureau’s construction projects in Region 1 and 2. Notably, Region 1 covers the Washington, DC metropolitan area and global support, while Region 2 comprises Huntsville, AL. Among the various contractors assigned for the project, Jacobs was the only company to win in both the regions.

Solid Project Execution Bodes Well

Efficient project execution has been one of the main characteristics driving Jacobs’ performance over the last few quarters. This is evident from the company’s fiscal first-quarter 2019 backlog. Backlog (excluding discontinued business ECR) grew 8% year over year to $20.3 billion. Higher-margin Aerospace, Technology and Nuclear (ATN), and Buildings, Infrastructure and Advanced Facilities (BIAF) line of businesses continue to see a robust pipeline of government and infrastructure spending programs.

Notably, the BIAF business (accounting for 66.4% of fiscal first-quarter revenues) reported revenues of $2,048.8 million, which increased an impressive 90.9% year over year. Backlog in the segment also increased 7.4% from the prior-year quarter.

Also, its ATN segment, representing 33.6% of the total revenues, surged 45.6% in the fiscal first quarter. Moreover, backlog at the end of the quarter grew 7.8% year over year.

The company anticipates adjusted EPS in fiscal 2019 within $4.40-$4.80 and the same to be more than $5.00 in fiscal 2020. Moreover, the company projects three-year net organic revenues to witness a 3-5% CAGR, with BIAF leading the way with 4-6% top-line CAGR and ATEN with 2-3% CAGR.

Share Price Performance

Jacobs’ shares have outperformed its industry in the past year. The company’s shares have gained 27% compared with 2.2% growth of its industry in the said period. Its price performance is backed by an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in five of the trailing six quarters.

Zacks Rank & Stocks to Consider

Currently, Jacobs carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the Zacks Construction sector include Apergy Corporation APY, Quanta Services, Inc. PWR and AECOM ACM. While Apergy and Quanta Services sport a Zacks Rank #1 (Strong Buy), AECOM carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Apergy, Quanta Services and AECOM’s earnings for the current year are expected to increase 2.1%, 25.3% and 2.6%, respectively.

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