JEC Jacobs Engineering Group Inc

Earlier this week, Jacobs Engineering Group Inc. (JEC) announced that it has been awarded two strategic contracts, one being the Contract Option Year for work at TVA's Kingston Site and another, a second contract from Hong Kong SAR Government to Manage and Operate Public Works Regional Laboratory.

Jacobs has been awarded its second option year on the Tennessee Valley Authority's (TVA) Ash Recovery Project. The option year for the project at the Kingston Fossil Plant in Kingston, Tenn. holds a potential value of more than $10 million.

Since 2009, Jacobs has been acting as a project/construction manager in the project, providing comprehensive program oversight at the Kingston site. The project was a recovery work after the failure of a dike containing coal combustion ash. The failure resulted in the release of 5.4 million cubic yards of ash into surrounding waterways and property.

With the recent option year contract, Jacobs is anticipated to continue its technical assistance to TVA in managing and executing the overall recovery, remediation and disposal of the ash.

On the same day, Jacobs announced that it has been awarded an outsourcing contract from the Civil Engineering and Development Department of the Government of the Hong Kong Special Administrative Region. The contract entails to provide management and operating services for the new Public Works Regional Laboratory (Siu Ho Wan).

As per the terms of the contract, Jacobs' will be operating the Siu Ho Wan facility and will manage its 51 laboratory-based staff for a period of four years.

The Siu Ho Wan facility will be entitled to support the Hong Kong-Zhuhai-Macao Bridge projects and other public works projects, hence providing construction materials compliance testing services for the same. The facility, which is expected to commence on June 1, has a contract value of $11 million.

Jacobs’ proven client servicing record as well as retention of its long-term relationships with existing clientele has been providing an edge over the industry players, such as Fluor Corporation (FLR) and Foster Wheeler AG (FWLT). Moreover, the company’s growing international exposure through contract wins and diversification have also been raising investor confidence over time.

We currently have a long-term Neutral recommendation on the stock. Moreover, the company maintains a Zacks #3 Rank, which translates into a short-term (1-3 months) Hold rating.

 
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