Jacobs Engineering Group Inc. ( JEC ) is scheduled to release its third-quarter fiscal 2014 (ended Jun 27, 2014) results after the market closes on Jul 28. The company had delivered a negative earnings surprise of 7.87% in the preceding quarter. Let's see how things are shaping up prior to this announcement.
Factors to Consider
Recently, Jacobs has been growing on the back of continuous contract wins. In the to-be-reported quarter, the company has received contracts in various regions including the U.K., Ohio, Canada, Belgium, Indonesia, Saudi Arabia and Sweden, to name a few. Further, acquisitions have aided Jacobs' expansion. The company has been gaining higher market share due to its inorganic growth. The company has a strong cash position to fund its future acquisitions as well as repay its debt.
With end markets promising a significant improvement, management predicts ample opportunities for the company to increase its market share. Moreover, the volume of repeat business generated by the company denotes the satisfaction rate of its customers.
Our proven model conclusively shows that Jacobs is likely to miss earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as we shall see below.
Zacks ESP: Jacobs' Most Accurate estimate is 77 cents, while the Zacks Consensus is pegged slightly higher at 80 cents. Hence, the Earnings ESP is -3.75%.
Zacks Rank: Jacobs has a Zacks Rank #4 (Sell) which lowers the predictive power of ESP. We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revision momentum.
Other Stocks to Consider
Here are some other companies in the industry that investors may want to consider on the basis of our model, which shows that they have the right combination of elements to post an earnings beat this quarter:
Fluor Corporation ( FLR ), Earnings ESP of +3.06% and a Zacks Rank #2 (Buy).
PulteGroup, Inc. ( PHM ), Earnings ESP of +2.86% and a Zacks Rank #3 (Hold).
Chicago Bridge & Iron Company N.V. ( CBI ), Earnings ESP of +0.72% and a Zacks Rank #3.