JEC Jacobs Engineering Group Inc

Jacobs Engineering Group Inc (JEC) reported fiscal third-quarter 2012 (ending June 29, 2012) financial results with earnings per share of 76 cents, surpassing the Zacks Consensus Estimate by a penny. Results also beat the earnings per share of 71 cents, reported in the year-ago comparable quarter.

Total revenue in the quarter inched up 1.0% year over year to $2,772.9 million. This, however, missed the Zacks Consensus Estimate of $2,870.0 million.

Revenues from Technical Professional Services (59.2% of total revenue) increased to $1,640.2 million, up 2.9% year over year. Revenues from Field Services (40.8% of total revenue) inched down 1.6% to settle at $1,132.7 million.

During the reported quarter, direct costs of contracts, a major expenditure for Jacobs, inched up 0.4% from the year-ago quarter to settle at $2,339.8 million. Selling, general and administrative (SG&A) expenses came in at $279.7 million, up 2.3% year over year.

Operating profit improved to $153.4 million, an increase of 10.0% over the year-ago quarter.

Backlog exiting the third quarter stood at $15.6 billion, an increase from $14.0 billion in the year-ago quarter. It includes backlog from technical professional services of $10.2 billion versus $8.7 billion at the end of the third quarter of 2011.

Jacobs’ cash and cash equivalents, exiting the third quarter, were approximately $898.6 million, up 16.1% year over year. Total debt decreased 7.0% from the previous year quarter, recording $512.4 million as of June 29, 2012.

Outlook: Jacobs maintains earnings guidance for fiscal 2012 within a range of $2.80 to $3.00 per share based on robust business outlook, improved margins and stronger backlog.

The company provides stiff competition to other industry players including Fluor Corporation (FLR) and Foster Wheeler AG (FWLT). We currently maintain a Neutral recommendation on Jacobs. The stock also bears a Zacks #4 Rank, which implies a short-term (1-3 months) Sell rating.

 
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