JEC Jacobs Engineering Group Inc

Jacobs Engineering Group Inc. (JEC) was recently awarded a contract from the Department of State (DOS), Office of Real Property Management and Special Projects Division. The contract, valued at approximately $50 million, has a base period of one year with four one-year options. 

As per terms of the contract, Jacobs will provide architectural and engineering services by engaging primarily in facilities analyses; building systems; structural surveys; space plans; interior design; design of system upgrade and replacement projects; design of physical security and surveillance systems; hazardous material abatement; and relocation planning and management/oversight services.

Jacobs won another contract from the U.S. General Services Administration for the renovation of the historic Federal Building at 50 United Nations Plaza (50 UNP), in San Francisco, California. Apart from offering construction management services, the company will also help in completing the $122 million renovation plan by 2013.

California-based Jacobs Engineering is one of the leading providers of professional, technical and construction services to industrial, commercial and governmental clients. The company provides its services through offices and subsidiaries located principally in North America, Europe, Asia and Australia.

Recently, Jacobs reported its second quarter 2011 financial results with earnings per share of 63 cents, in line with the Zacks Consensus Estimate. The company’s top-line results were weak in the quarter as total revenue plummeted 1.1% year over year to $2,558.0 million. However, revenue increased 8.6% sequentially and above the Zacks Consensus Estimate of $2,523.0 million.

For the fiscal year 2011, the company revised its earnings guidance to the $2.40-$2.80 range from the prior range of $2.40-$2.85. The guided range includes the net contribution from the acquired businesses of Aker Solutions. The narrowed guidance range reflects management’s cautious outlook regarding its public markets, especially the federal government in the U.S. and U.K. These clients are going through some significant budget reviews and budget related problems.

The Zacks Consensus Estimate for the third quarter 2011 is 71 cents, and for the fiscal year 2011 and 2012, Zacks forecasts $2.59 and $3.01, respectively.

The company faces stiff competition from its peers like Fluor Corporation (FLR) and Foster Wheeler AG (FWLT). We currently maintain a Neutral recommendation on the stock.

 
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