Jacobs Wins EC Contract - Analyst Blog
May 31 2012 - 4:30AM
Zacks
Recently, Jacobs
Engineering Group Inc.
(JEC) announced that it has
received a two-year framework contract from the "Engineering
Consortium" (EC) under an undisclosed value.
The consortium includes Iberdrola
Ingenieria y Construccion S.A.U. along with its UK subsidiary,
Tractebel Engineering from the GDF SUEZ Group.
The Engineering Consortium will be
providing engineering and consultancy services to NUGENERATION
LIMITED ("NuGen") for the development of its new build nuclear
power plant project in West Cumbria, United Kingdom. For this
purpose, the consortium will support the project throughout in the
areas of site investigation, site characterization, grid
connection, and preliminary construction services among others.
Together with the consortium,
Jacobs will ensure in-depth experience and relevant services to
NuGen, supporting its business objectives. Jacobs’ contract terms
with the consortium specified that the company will be providing
environmental consultancy and engineering support to EC in the
development of this major nuclear new build program in the UK.
Jacobs, one of the world's largest
and most diverse providers of technical, professional, and
construction services, is well poised to take advantage of a strong
secular infrastructure growth trend worldwide. Considering its
low-cost position relative to its competitors, such as
Fluor Corporation (FLR) and Foster Wheeler
AG (FWLT), the company is likely to maintain sustainable,
long-standing associations with its clients.
With this new framework contract,
Jacobs seems to keep up with its acquisition/contract winning
streak from federal and other clients. In the recent past, pricing
per acquisition/contract has also improved in favor of Jacobs,
wherein management sees potential for improving margins. Moreover,
contracts continue to accelerate growth and expansion, providing
room for Jacobs to diversify across markets, geographies and
services.
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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