Jacobs Signs Another Army Contract - Analyst Blog
April 08 2012 - 10:00PM
Zacks
Defense deals continue to flow for Jacobs Engineering Group Inc
(JEC). Earlier this week, the company signed a new contract to
provide systems engineering and technical assistance (SETA) support
to the U.S. Army's Program Executive Office (PEO) Soldiers.
The terms of the contract specified that Jacobs will provide
effective mission critical support for the PEO Soldiers who
develop, acquire, field and sustain integrated and affordable
state-of-the-art equipment to improve Soldier dominance in Army
operations. The contract carries a one-year base and two one-year
extension options and is estimated to bring in $157 million.
As part of the company's core clientele, the U.S. Army and other
federal governments have been commanding a significant share for a
long time. Such clients have generated substantial revenue for the
company, thus ensuring sustainability.
Abiding by such optimism, Robert Norfleet, the Vice President of
Jacobs Engineering Group, marked this collaboration as a
significant opportunity to strengthen the long-standing liaison
with the U.S Army and expects to continue the same.
Prior to this, the last U.S defense task order came to Jacobs was
from the Secretary of Air Force Financial Management, Ohio, in late
February. Jacobs was selected to provide IT support for Air Force
financial applications. Elsewhere, in mid-February Jacobs was
chosen as a technical and operations support provider for the
Marine Corps Logistics Command in U.S.
Such consistent contract wins from U.S defense services reflect
client confidence for Jacobs. Although sustainable, such
long-standing associations are not problem-free. Prolonged federal
budget constraints or unforeseen termination of government funded
projects may drastically reduce order flow, marring
profitability.
Fluor Corporation (FLR) and Foster Wheeler AG (FWLT), sharing an
identically competitive platform like Jacobs, may also face similar
challenges. However, Jacobs' recent mix shift toward higher-margin
private projects looks convincing enough to guard the company well
against such unlikely state of affairs.
We currently have a long-term Neutral recommendation on the stock.
Also, the company maintains a Zacks #3 Rank, which implies a
short-term (1-3 months) Hold rating.
FLUOR CORP-NEW (FLR): Free Stock Analysis Report
FOSTER WHELR AG (FWLT): Free Stock Analysis Report
JACOBS ENGIN GR (JEC): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Foster Wheeler (NASDAQ:FWLT)
Historical Stock Chart
From Jun 2024 to Jul 2024
Foster Wheeler (NASDAQ:FWLT)
Historical Stock Chart
From Jul 2023 to Jul 2024