Jacobs Engineering Group Inc. JEC has received a contract from Newcrest Mining Limited to provide underground materials handling services, as part of Cadia expansion feasibility study.
Newcrest owns as well as operates a portfolio of mainly low cost, long life mines, along with a strong pipeline of brownfield and greenfield exploration projects. These include mines in Australia, Papua New Guinea (“PNG”) and Indonesia. Jacobs, which has been supporting Newcrest's brownfield and greenfield projects for more than two decades, will now provide a low capital intensity solution for one of Australia’s largest gold mining operations located in New South Wales.
Efficient project execution has been one of the main characteristics driving Jacobs’ performance over the last few quarters. Series of contract wins and its solid backlog serve as testimony to the fact. Backlog at the end of fiscal first-quarter 2019 was $20.3 billion, increasing 8% year over year. Higher-margin line of businesses — Aerospace, Technology and Nuclear (ATN), and Buildings, Infrastructure and Advanced Facilities (BIAF) — continues to see a robust pipeline of government and infrastructure-spending programs.
Jacobs’ shares have outperformed its industry over the past three months. The company’s shares have gained 22.2% compared with 15.7% growth of its industry in the said period. Its price performance is backed by an impressive earnings surprise history. The company surpassed earnings estimates in six of the trailing seven quarters. Meanwhile, earnings estimates for fiscal 2019 have moved 1.3% upward over the past 30 days.
Jacobs has been registering solid quarterly numbers. The company’s earnings and revenues increased 69.6% and 73% (up 12% on a pro-forma basis), respectively, in the last reported quarter. Adjusted operating margin expanded 79 basis points (bps) to 5.2% in the quarter.
Its three-year targets, including organic revenue CAGR of 3-5%, adjusted operating margin improvement of 125-175 bps, double-digit adjusted EBITDA growth and ROIC expansion of 100-150 bps, seem encouraging.
Zacks Rank & Other Key Picks
Currently, Jacobs carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the Zacks Construction sector include Quanta Services, Inc. PWR , Altair Engineering Inc. ALTR and EMCOR Group, Inc. EME. While Quanta sports a Zacks Rank #1 (Strong Buy), both Altair and EMCOR carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Quanta, Altair and EMCOR’s 2019 earnings are expected to grow 27.9%, 58.6% and 6.9%, respectively.
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