Jacobs to Ride Growth Trajectory on New Contract Wins - Analyst Blog

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Jacobs Engineering Group Inc. ( JEC ) recently received a multi-year contract from Chevron South Africa, the South African unit of oil major Chevron Corp. ( CVX ). At the same time, the Texas Department of Transportation awarded a General Engineering Consultant (GEC) contract to the company. Such prospective deals will expectedly propel organic growth of Jacobs in the long run.

Chevron's Multi-Year Contract

As per the terms and conditions of the multi-year Chevron contract, Jacobs will continue to support the Cape Town Refinery through specialized professional services. It will provide engineering, construction management and procurement services to Chevron.

Through the deal, Jacobs will aim at making Chevron's business more profitable, safe and accountable in the long run. Furthermore, with the help of this multi-year performance-based improvement plan, Jacobs will assist Chevron in enhancing the quality of work in its capital project. The deal for undisclosed amount replaces the erstwhile contract awarded in 2004.

GEC Contract

Jacobs received an engineering consultant contract from the Department of Transportation in Texas for providing certain project development services. These projects will be urbanized under public-private partnership (PPP) or design-building business agreements. The contract calls for no definite delivery date but the maximum value of the order over six years is $20 million.

Jacobs will also deliver GEC services for supervising the implementation of PPP and Design-Build projects in Texas. Most of the covered projects are located in the Rio Grande Valley and San Antonio areas. Estimated construction costs of each project will range from $50 - $500 million. Through the contract, Jacobs desires to improve its expertise in providing mobility and connectivity services for the state.

Moving Forward

Jacobs is one of the most popular technical services providers in the global forum. It offers professional, technical and construction services to diversified public, industrial and commercial clients. The new contracts are expected to augment the tangible and intangible resource base of Jacobs. However, such positive outcomes can be offset by uncertain currency or exchange rate volatilities in future.

With long-term benefits of the contracts yet to bear fruit, Jacobs currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the industry include RealD Inc. ( RLD ) and Pernix Group Inc. ( PRXG ), both carrying a Zacks Rank #2 (Buy).

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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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