Jacobs' Confluence Water to Support Sydney Water Program

The joint venture company of Jacobs Engineering Group Inc. J, Broadspectrum and Downer EDI — Confluence Water Pty Ltd — was selected as one of three consortia to deliver services under Sydney Water's Partnering for Success program.

Under this $1.4-billion contract, Confluence Water will provide design, construction, maintenance and facilities management services to Sydney Water's North region. The JV will be responsible for the maintenance, renewal and upgrade of existing assets in the region. It will also construct new assets like pipelines, pump stations and wastewater treatment plants.

The project, which will commence from Jan 6, 2020, will be delivered over a 10-year period with a review after five years to assess each consortium's performance.  

Going forward, the company’s partnership will ensure safe and reliable services for all Sydney Water’s and its customers. Also, it will reduce costs and drive innovation. Moreover, Jacobs’ People & Places Solutions or PPS business will support the program.

Jacobs’ Project Execution Bodes Well

Jacobs’ PPS segment, which contributed 64.3% to total fiscal 2019 revenues, serves clients of broad sectors like water, transportation, building and semiconductors. The segment has also been a major growth driver for the company.

Recently, Jacobs received a contract from National Aeronautics and Space Administration (NASA) where PPS will provide Environmental compliance, Environmental remediation and Regulatory risk analysis and communications services to Marshall Space Flight Center.

During fiscal fourth quarter, the segment’s revenues increased 8.8% year over year. Also, backlog at the end of the quarter was up 10% from the year-ago period. Notably, the company’s solid project execution strategy and strategic focus on transitioning from engineering and construction to global technology-forward solutions bode well.

Price Performance

Shares of Jacobs have surged 51.4% year to date compared with the Zacks Engineering - R And D Services industry's 26.8% rally. The price performance is backed by an impressive earnings surprise history, wherein the company surpassed estimates in eight of the trailing nine quarters. Also, consistent expansion strategies through acquisitions and focus on high value business are benefiting the company. The company’s regular return of wealth to its shareholders is also commendable.

Zacks Rank & Key Pick

Currently, Jacobs carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Some better-ranked stocks in the Zacks Construction sector are Gates Industrial Corporation plc GTES, Quanta Services, Inc PWR and Foundation Building Materials, Inc FBM. Each stock sports a Zacks Rank #1.

Gates Industrial’s 2020 earnings is expected to rise 5.3%

Quanta Services has three-five year expected earnings per share growth rate of 14.5%.

Foundation Building Materials surpassed estimates in all of the trailing four quarters, the average being 45.1%.

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

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