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Jacobs (JEC) Q1 Earnings Beat Estimates, Revenues Down Y/Y

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Jacobs Engineering Group Inc.JEC reported mixed first-quarter fiscal 2017 (ended Dec 30, 2016) results.

Quarterly adjusted earnings came in at 68 cents per share, above the Zacks Consensus Estimate of 63 cents. However, the bottom line fell short of the year-ago tally of 78 cents per share.

On a month-to-date basis, Jacobs' shares recorded a return of 0.41%, while the Zacks categorized Construction/Building Services industry declined 0.24%.

Revenues

Revenues in the fiscal first quarter dipped 10.4% year over year to $2,551.6 million and also fell short of the Zacks Consensus Estimate of $2,638 million.

Segment Details

Revenues of Petroleum & Chemicals segment came in at $641.8 million, down 31.9% year over year. Aerospace & Technology segment's quarterly sales dropped 13.8% to $577.4 million.

However, Buildings & Infrastructure segments' sales climbed 3.1% year over year $580.6 million. Industrial segment's revenues were up 11.8% year over year to $751.7 million.

Costs/Margin

Direct costs of contracts, a major expenditure for Jacobs, decreased 11.4% year over year to $2,132.3 million. Selling, general and administrative expenses declined approximately 13.2% year over year to $330.7 million.

The company's operating margin expanded 140 basis points (bps) year over year to 3.5%.

At the end of the first three months of fiscal 2017, the company's backlog totaled $18.1 billion, marginally down by 0.2% year over year.

Balance Sheet/Share Repurchase Update

As of Dec 30, 2016, Jacobs' cash and cash equivalents were approximately $736.5 million compared with $655.7 million as of Sep 30, 2016. Long-term debt was $387 million compared to $385.3 million as of Sep 30, 2016.

The company's capital expenditure at the end of the fiscal first quarter was $21.1 million, up 31.7% year over year.

Outlook

For fiscal 2017, the company believes that cost savings from its restructuring actions and constant reinvestment in strategic growth initiatives will act as key growth drivers. Over the past few quarters, Jacobs successfully trimmed its general and administrative costs, and improved the receivables collection performance as well.

These, in turn, supplemented growth in cash flows. This trend is expected to continue in fiscal 2017 as well.

Notably, this Zacks Rank #2 (Buy) company believes that its inaugural dividend scheme of 15 cents per share and ongoing share repurchase program would ensure its commitment toward shareholders, moving ahead.

However, on the flip side, the company anticipates macroeconomic headwinds, such as strengthening of the U.S. dollar and weakness in the global commodity & energy markets, will continue to hurt its revenues and earnings performance.

Key Picks

Some other well-ranked stocks within the industry are listed below:

MasTec, Inc. MTZ has a positive average earnings surprise 61.27% for the trailing four quarters and currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

NVR, Inc. NVR currently boasts a Zacks Rank #1 and has a positive average earnings surprise 0.90% for the last four quarters.

PulteGroup, Inc. PHM also flaunts a Zacks Rank #1 and has a positive average earnings surprise 13.49% for the past four quarters.

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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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