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Jacobs to Repurchase $500M worth Shares, More Contract Wins

Zacks Equity Research

Jacobs Engineering Group Inc. (JEC) recently announced that its board of directors have approved a share buyback program of $500 million, to be executed over the next three years. The authorization reflects the company’s commitment towards rewarding its shareholders handsomely.

Shares will be repurchased from the open market under favorable conditions, to maximize returns to the company’s shareholders. In addition, lower share count will eventually boost earnings per share. In the years ahead, Jacob aims to expand its earnings by 15% annually through organic growth and meaningful acquisitions.

Concurrent with this news, Jacobs communicated that it has won 15 new Distributed Antennae Systems (:DAS) contracts. Per the terms of the contracts, the company will be installing upgraded DAS and small-cell systems for both private and public sectors clients. The new contract wins indicate the flourishing telecommunications business of the company.

Further, Jacobs won a contract from the Civil Engineering and Development Department of the Government of the Hong Kong Special Administrative Region. The contract requires the company to provide service to the Public Works Regional Laboratory (:PWRL).

We believe that Jacobs’ unmatched contract wins will aid its organic growth. Backed by joint ventures and contract wins, the company caters to an array of sectors like oil and gas, petrochemical, mining, IT services and power. Jacobs presently has a significant share in the huge global infrastructure market, which is expected to grow further in the future quarters.

The Zacks Consensus Estimate for Jacobs is pegged at 82 cents per share for fourth-quarter fiscal 2014, $2.71 for fiscal 2014 and $3.86 for fiscal 2015.

With a market capitalization of $7 billion, Jacobs holds a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the industry include Willdan Group, Inc. (WLDN), Winnebago Industries, Inc. (WGO) and VSE Corp. (VSEC). While Willdan Group sports a Zacks Rank #1 (Strong Buy), Winnebago Industries and VSE Corp. carry a Zacks Rank #2 (Buy).

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