Jacobs Wins 5-Year Contract From U.S. Air Force for $75.8M

Jacobs Engineering Group Inc. JEC has won a Patriot Excalibur (“PEX”) contract from the U.S. Air Force to provide responsive, innovative and sustainable unit-level software solutions at the Life Cycle Management Center located in Hanscom Air Force Base in Bedford, MA.

The five-year deal, which has a total contract value of $75.8 million, will enable Air Force, Joint Service and Foreign Military unit personnel to operate this cutting-edge software toolset. Jacobs will maintain the PEX software, and provide systems engineering, training and field implementations services during the contract period.

Initiated in 1998, PEX underpins ground intelligence, surveillance and reconnaissance, special mission units, and Air Force major commands. The software helps the said personnel to conduct errorless operational tasks and track readiness status. Jacobs will offer tailormade mission-oriented solutions to the U.S. military at more than 30 Air Force locations.

The company has been assisting the U.S. Air Force over the past several years. With this latest contract, it will continue innovating new technologies through its Aerospace, Technology and Nuclear (“ATN”) line of business.

Recent ATN Contract Wins

On Mar 21, 2019, Jacobs received a contract extension from NASA to provide aerospace testing, and facility operations and services at NASA’s Research Center in Mountain View, CA. The Aerospace Testing and Facility Operation and Maintenance IV (“ATOM”) contract is now extended through February 2020. The total contract value now stands at $178 million.

Per the deal, it will continue supporting NASA Ames Research Center for operation, maintenance, repair and management of arc jets, wind tunnels, hypersonic facilities, and ballistics complexes. These services will help the Aeronautics Research Mission directorate, Space Launch System and Orion Multi-Purpose Crew Vehicle, along with commercial and other government organizations.

Jacobs has been efficiently executing project activity, which is eventually driving its performance. This is evident from the company’s fiscal first-quarter 2019 backlog. Backlog (excluding discontinued business ECR) grew 8% year over year to $20.3 billion. Higher-margin ATN and Buildings, Infrastructure and Advanced Facilities (“BIAF”) line of businesses continue to see a robust pipeline of government and infrastructure-spending programs.

Especially, the ATN business (contributing 33.6% to total revenues) generated revenues of $1,035 million in the quarter, increasing an impressive 45.6% year over year. Backlog in the segment also grew 7.8% from the year-ago period. The company projects three-year net organic revenues to witness a 3-5% CAGR, with a CAGR of 2-3% for ATN.

Share Price Performance

Jacobs’ shares have outperformed its industry in the past year. The company’s shares have gained 27.6% against 3% decline of its industry in the said period. The price performance is primarily backed by its impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in six of the trailing seven quarters. Meanwhile, earnings estimates for fiscal 2019 have moved 0.8% upward over the past seven days, reflecting analysts’ confidence in the company’s growth potential.

Zacks Rank & Stocks to Consider

Currently, Jacobs carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Zacks Construction sector include Quanta Services, Inc. PWR, Apergy Corporation APY and Armstrong World Industries, Inc. AWI. While Quanta Services and Apergy sport a Zacks Rank #1 (Strong Buy), Armstrong World carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Quanta Services’ earnings for the current year are expected to increase 25.3%.

Apergy has a solid three-five year expected EPS growth rate of 22.5%.

Armstrong World’s earnings for the current year are anticipated to grow 21.9%.

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