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Jacobs Wins Environmental Deal From NSF, Fortifies BIAF Unit

Zacks Equity Research

Jacobs Engineering Group Inc.’s JEC Buildings, Infrastructure and Advanced Facilities or BIAF line of business has been rallying lately, courtesy of continuous focus on project execution. The company’s ongoing contract wins bear testimony to the fact. Recently, Jacobs won a contract from the National Science Foundation (“NSF”) to provide environmental planning, compliance analyses, and associated reports and documentation services.

Under this blanket purchase agreement, Jacobs’ scope of work includes support of NSF's environmental compliance obligations through the preparation of full life-cycle Environmental Impact Statements and Environmental Assessments — in accordance with the National Environmental Policy Act — including associated supporting studies.

The company may require performing services that include preparation of documents, analyses, studies and correspondence in support of NSF's compliance with such laws as the National Historic Preservation Act, Endangered Species Act, Marine Mammal Protection Act, Coastal Zone Management Act and Clean Water Act, as well as with applicable presidential executive orders.

The company’s BIAF unit — accounting for 63.5% of total revenues — will continue to address the agency's environmental requirements and expectations under the latest contract, whose period of performance should not exceed 66 months.

A Look at Jacobs’ BIAF Performance

Revenues from the BIAF segment grew 5.3% year over year in third-quarter fiscal 2019 (ended Jun 28, 2019). Backlog at the end of the quarter was roughly $14 billion, up 10.4% year over year. Its sales pipeline has also been strengthening, which grew 15% year over year in the quarter, with strong contribution from most geographies around the globe.

From a geographic standpoint, North America continues its strong growth momentum, primarily in water, environmental, transportation and advanced facilities. Strong BIAF project and program execution position Jacobs for long-term and sustainable, competitive differentiation.

This line of business remains well positioned for the remainder of fiscal 2019 and is on track to achieve its 2021 targets. The company expects 3-5% net organic revenue growth for the next three years (through 2021), with BIAF leading the way with 4-6% top-line CAGR.

Courtesy of improved segmental performances, solid backlog and efforts to focus on high-value business, shares of Jacobs have rallied almost 52.3% so far this year, outperforming its industry’s 13.5% growth. The price performance was also backed by an impressive earnings surprise history. The company — which shares space in the industry with AECOM ACM, KBR, Inc. KBR and Quanta Services, Inc. PWR — surpassed earnings estimates in seven of the trailing eight quarters.

 

 

The outperformance is likely to continue in the near term as well, buoyed by this Zacks Rank #2 (Buy) company’s strong backlog, inorganic moves, transformed portfolio, and increased focus on infrastructure, aerospace, cybersecurity and technical building projects. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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