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Yet another Contract Win for Jacobs

Zacks Equity Research

Jacobs Engineering Group, Inc. (JEC) recently announced that it has received a $1 billion contract award from the Metropolitan St. Louis Sewer District (MSD). This shall pertain to providing engineering services for the Lower & Middle River des Peres CSO Controls Systems Improvements at St. Louis, Missouri.

The Metropolitan St. Louis Sewer District (MSD) caters to both, residential and industrial customers providing them with wastewater collection and other treatment services at St. Louis. The current project given to Jacobs is a part of MSD’s CSO Long-Term Control Plan (:LTCP) and its proposed federal consent decree.

The contract awarded includes providing of four main facilities: tunnels, high rate treatment systems, pump stations and near surface facilities. Jacobs understands the arcane nature of the project it has been granted as currently it is the largest in the LTCP bracket.

We believe that a company of repute and approbatory goodwill such as Jacobs shall most certainly be able to meet the high standards desired from this venture. Management is also quite upbeat about rendering quality services, judging by the interminable saga of contract wins it has been garlanded with of late. The most recent ones include the laudatory U.S. General Services Administration (:GSA) task order and the Air Force Alliant Contract.

Not long ago, the company reported its first quarter financial results of fiscal 2012, whereby it reported an annual increase of about 12% in total revenues coming at $2.6 billion. Moving forward, the company is quite hopeful of a similarly strong second fiscal quarter.

Jacobs, presently appears to be in a formidable position to grapple with its competitors which include Shaw Group Inc. (SHAW), CDI Corp. (CDI) and Stantec Inc. We continue to maintain a Neutral recommendation on Jacobs. Our view is supported with a Zacks #3 Rank on the stock which translates into a short-term rating of Hold.

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