JEC Jacobs Engineering Group Inc

Jacobs Engineering Group Inc. (JEC) will be reporting its fourth-quarter and fiscal 2011 earnings on Tuesday, November 15, 2011.

The current Zacks Consensus Estimate for earnings per share (EPS) is 73 cents, representing an annualized growth of 18.90%.  

With respect to earnings surprises over the trailing four quarters, JECoutperformed the Zacks Consensus Estimate in one quarter; was in line in another and lagged behind in two other quarters. Average earnings surprise was a negative 1.75%. The average earnings surprise implies that the company underperformed the Zacks Consensus Estimate by the same magnitude over the last four quarters.

Third Quarter Highlights

On July 25, 2011, Jacobs Engineering Group Inc. reported its financial results for the third quarter of 2011 with net earnings per diluted share of $0.71 in the quarter, up from $0.15 reported in the year-ago quarter. Results were marginally above the Zacks Consensus Estimate of $0.70.

Total revenue jumped 9.4% year over year to $2,744.2 million, above the Zacks Consensus Estimate of $2,687.0 million. Revenues from Technical Professional Services (58.1% of total revenue) increased to $1,593.5 million from $1,280.1 million in the third quarter of fiscal 2010 while revenues from Field Services (41.9% of total revenue) dropped 6.3% to $1,150.7 million.

Agreement of Estimate Revisions   

In the last 30 days, none of the analysts providing estimate increased or decreased the company’s earnings per share (EPS) for the fourth quarter, as there was no catalyst for such change. However, for fiscal 2011, one analyst increased the estimate in the last 30 days while one decreased the same for fiscal 2012.

Magnitude of Estimate Revisions   

Estimates over the last 30 days remained intact at 73 cents per share for the fourth quarter of 2011, representing a year-over-year growth of 18.90%.

Estimate for fiscal 2011 also remained intact at $2.59 over the last 30 days while that for fiscal 2012 demonstrated a similar trend at $3.01. These estimates represented a year-over-year growth of 4.48% for 2011 and 16.03% for 2012.

Our Take   

Jacobs is likely to post impressive results in the fourth quarter and fiscal 2011 based on improvements in the economic conditions and end markets as well as the company’s diversification across geographies and services. We believe that the company’s contract wins as well as controlled SG&A expenses and backlogs over time will help to improve financials, going forward.

Jacobs Engineering Group Inc. is one of the world's largest engineering and construction companies providing services to a variety of industrial, commercial and government clients across a global network. The company directly competes with its peers, Fluor Corporation (FLR) and Foster Wheeler AG (FWLT).

We currently maintain a long-term Neutral recommendation on the stock. Jacobs has a Zacks #3 Rank, which translates into a short-termHold rating (1-3 months).

 
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