Jacobs to Provide Technical Advice to Rail Projects Victoria

Shutterstock photo

Jacobs Engineering Group Inc. JEC , in conjunction with its Aurecon Jacobs Mott MacDonald Joint Venture (AJM JV), is to serve Rail Projects Victoria as a technical advisor. The rail authority has appointed Jacobs to look after the Victorian Rail Infrastructure Program (VRIP).

Under the program, Rail Projects Victoria is slated to host a few of Melbourne's busiest train lines and free up capacity in such a way that more than half a million additional passengers per week can board trains.

Further, Jacobs is supposed to inspect options, including creating demand for rail corridors, faster rail services to widespread regions, planning for integrated corridors and electrification in areas. The new program is an extension of the Ballarat Line Upgrade, the Regional Rail Revival in Victoria and the Melbourne Metro Tunnel Project, which Jacob has been working on over the past three and half years.

The appointment provides Jacobs with the opportunity to further focus on high-value business. The company is benefitting from major government customers across the Department of Defense, Department of Energy, intelligence community and NASA.

Backed by an impressive earnings trend, shares of Jacobs have gained 31.2% over the past year, outperforming the industry 's rally of 1.9%.

Continuous Contract Wins - A Major Positive

Appointment of Jacobs as the technical advisor to Rail Projects Victoria is reflective of the company's ability to cash in on big government projects for driving incremental revenues.

In the last few months, Jacobs secured several contracts from renowned institutions and public-sector agencies like the ENCINA Chemicals, LLC; Sasol Group Technology; Shell Oil Company; Chevron Products Company; the U.S. Army; Equate Petrochemical Company; Exxon Mobil Corporation' TransCanada Corporation; Sellafield Ltd; Saudi Aramco; Suncor Energy; Sipchem Lubrizol; Kraton Corporation and Codelco.

Subsequently, backlog at the end of the fiscal third quarter was $27.2 billion, increasing 47% year over year on a reported basis and 8% on a pro-forma basis. The company further expects the trend to continue, driven by strong demand across Aerospace, Technology, Environmental and Nuclear (ATEN), and Buildings, Infrastructure and Advanced Facilities (BIAF) line of businesses.

Our Take

We believe that the recent opportunity will further boost Jacobs' BIAF segment revenues. In the third quarter of fiscal 2018, the segment's revenues totaled $1,228.3 million, increasing 34% year over year. It represented 29.5% of the reported quarter's revenues. Backlog at the end of the quarter was roughly $7 billion, up 8.5% year over year.

Moreover, by working on VRIP, Jacobs may get additional exposure from the Victorian Government, which will fortify its brand and business.

Zacks Rank & Other Stocks to Consider

Jacobs currently has a Zacks Rank #2 (Buy). Other top-ranked stocks in the industry include Gates Industrial Corporation GTES ; KBR, Inc. KBR and Apergy Corporation APY . While Gates Industrial and KBR sport a Zacks Rank #1 (Strong Buy), Apergy carries a Zacks Rank #2. You can see  the complete list of today's Zacks #1 Rank stocks here .

Gates Industrial's earnings for 2018 are expected to increase 42.2%, while KBR and Apergy's 2019 earnings are expected to grow 12.1% and 19.4%, respectively.

Wall Street's Next Amazon

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It's a once-in-a-generation opportunity to invest in pure genius.

Click for details >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Jacobs Engineering Group Inc. (JEC): Free Stock Analysis Report

KBR, Inc. (KBR): Free Stock Analysis Report

Gates Industrial Corporation PLC (GTES): Free Stock Analysis Report

Apergy Corporation (APY): Free Stock Analysis Report

To read this article on Zacks.com click here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Symbols: JEC , KBR , GTES , APY

More from Zacks.com




Equity Research

Research Brokers before you trade

Want to trade FX?