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Jacobs Engineering (JEC) Down 8.8% Since Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Jacobs Engineering Group Inc.JEC . Shares have lost about 8.8% in that time frame.

Will the recent negative trend continue leading up to its next earnings release, or is JEC due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Fiscal First-Quarter 2018 Highlights

Jacobs Engineering Group reported impressive results for first-quarter fiscal 2018 (ended Dec 29, 2017).

Earnings/Revenues

Adjusted earnings in the reported quarter came in at 77 cents per share, beating the Zacks Consensus Estimate of 67 cents. The bottom line also came in higher than the year-ago tally of 68 cents per share.

Revenues improved to $2,750.3 million from 2,551.6 million recorded in the prior-year quarter. The top line exceeded the Zacks Consensus Estimate of 2,563 million.

Segment Details

Aerospace & Technology's quarterly sales jumped 25% to $721.5 million. Buildings & Infrastructure sales climbed 13.4% year over year $658.5 million.

However, Industrial segment revenues edged down 0.3% year over year to $749.3 million. Also, revenues of the Petroleum & Chemicals segment came in at $621 million, down 3.2% year over year.

Costs/Margin

Direct cost of contracts, a major expenditure for Jacobs, increased 6.1% year over year to $2,263.1 million. Gross margin in the reported quarter came in at 17.7% compared with 16.4% reported in the year-ago quarter.

Selling, general and administrative expenses flared up approximately 32.9% year over year to $439.5 million. Operating margin was 1.7% for the quarter compared with 3.5% in the prior-year quarter.

At the end of the reported quarter, the company's backlog came in at a record high of $26.2 billion.

Balance Sheet

At the end of the fiscal first quarter, Jacobs' cash and cash equivalents were approximately $1,059.8 million compared with $774.2 million as of Sep 29, 2017. Long-term debt was $2,587.9 million compared to $235 million as of Sep 29, 2017.

The company's capital expenditure for the fiscal first quarter totaled $22.5 million compared with $21.1 million witnessed in the year-earlier quarter.

Outlook

Jacobs raised its adjusted earnings guidance for fiscal 2018 to the $3.85-$4.25 per share range, higher than the previously estimated range of $3.55-$3.95 per share. The company has lifted its view backed by the benefits secured from the recent U.S. tax reform. Jacobs is poised to grow on the back of solid segmental performance and the CH2M buyout benefits.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. There have been three revisions higher for the current quarter compared to one lower.

Jacobs Engineering Group Inc. Price and Consensus

Jacobs Engineering Group Inc. Price and Consensus | Jacobs Engineering Group Inc. Quote

VGM Scores

At this time, JEC has an average Growth Score of C, however its Momentum is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Based on our scores, the stock is more suitable for momentum investors than those looking for value and growth.

Outlook

Estimates have been broadly trending upward for the stock and the magnitude of these revisions looks promising. It comes with little surprise JEC has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

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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.


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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