Jacobs (JEC) to Report Q3 Earnings: What's in the Offing?

Jacobs Engineering Group Inc.JEC is scheduled to report third-quarter fiscal 2018 (ended Jun 30, 2018) results on Aug 6, before the opening bell.

In the last reported quarter, the company's earnings came in at $1.00 per share, beating the Zacks Consensus Estimate of 88 cents by 13.64%. In fact, the company surpassed estimates in all the past four quarters, resulting in an average positive surprise of 12.34%.

First Half Recap

In the first half of fiscal 2018, the company generated $6,685.3 million of total revenues, reflecting an increase of 37.7% year over year. In fiscal second-quarter 2018, the company's adjusted earnings increased from the year-ago quarter by 28.2%, following a 13.2% increase in the fiscal first quarter. Profitability improved on the back of higher revenues, increased focus on high-value businesses, efficient project execution and high CH2M profitability. These positives are likely to continue driving Jacobs' top as well as bottom lines in the upcoming quarters. Notably, in fiscal second-quarter earnings call, the company raised its adjusted earnings projection to $4.00-$4.40 per share from the prior guided range of $3.85-$4.25 per share.

Let's see how things are shaping up for this announcement.

Factors at Play

Though no specific financial guidance has been provided for the fiscal third quarter, from Jacobs' expectation for the full fiscal, we get a rough idea of the factors that might have influenced results this time around.

Jacobs continues to benefit from robust end-market demand across its three segments, i.e., Aerospace, Technology, Environmental and Nuclear line of business; Buildings, Infrastructure and Advanced Facilities business; along with improving fundamentals in its Energy Chemicals and Resources sector.

The company expects elevated defense spending in major economies like the United States, new organic investments, bolt-on acquisitions, superior customer relationships and sturdier demand for state-of-the-art technology solutions to boost revenues of Aerospace & Technology line of business (LOB).

Additionally, increasing public investments in worldwide transportation and water infrastructure, as well as business prospects in the healthcare market are anticipated to drive top-line performance of the company's Buildings & Infrastructure LOB in the near term.

Moreover, the company believes that revenues of its Industrial LOB will go up in the upcoming quarters, on the back of improved life science, semiconductor, and mining & minerals businesses.

Furthermore, Jacobs expects that efforts to strengthen the downstream chemicals and refining business will likely drive revenues of the company's Petroleum & Chemicals LOB.

Overall, stellar top-line performance of the aforementioned segments, along with prudent cost management and improved project execution are expected to have reinforced the company's bottom-line performance in the to-be-reported quarter.

Overall, for the fiscal third quarter, the Zacks Consensus Estimate for total revenues is pegged at $3.98 billion, implying 58.4% growth. The Zacks Consensus Estimate for earnings is pegged at $1.19, reflecting a 50.6% year-over-year increase.

Jacobs Engineering Group Inc. Price and EPS Surprise

Jacobs Engineering Group Inc. Price and EPS Surprise | Jacobs Engineering Group Inc. Quote

Here is What Our Quantitative Model Predicts:

Jacobs does not have the right combination of the two key ingredients - a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher - to increase the odds of an earnings beat. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Earnings ESP: Jacobs has an Earnings ESP of -7.43%.

Zacks Rank: Currently, the company carries a Zacks Rank #2 (Buy), which increases the predictive power of ESP. However, we also need to have a positive ESP to be confident about an earnings surprise.

Stocks to Consider

Here are some stocks in the Zacks Construction sector that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Boise Cascade Company BCC has an Earnings ESP of +14.97% and sports a Zacks Rank #1. The company is scheduled to report quarterly numbers on Aug 6.

GCP Applied Technologies Inc. GCP has an Earnings ESP of +2.56% and carries a Zacks Rank #3. The company is slated to report quarterly numbers on Aug 7.

Granite Construction Incorporated GVA has an Earnings ESP of +2.35% and also sports a Zacks Rank #1. The company is slated to report quarterly numbers on Aug 8.

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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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