Jacobs Alliance To Serve Australia's Cross River Rail Project

Jacobs Engineering Group Inc. (NYSE:J) has received a contract from the Queensland Government for the Cross River Rail project in Brisbane, Australia. As part of the Unity Alliance, Jacobs has been selected to deliver the rail, integration and systems work package of the project.

Jacobs and its partners — CPB Contractors, UGL and AECOM (NYSE:ACM) — are entitled to deliver the package that includes the design and reconfiguration of the rail network at either end of the new cross city tunnels, supply and installation of supporting rail systems, integration of Cross River Rail into Queensland Rail's existing network, as well as completion of seven station upgrades. Jacobs’ People & Places Solutions or PPS business will support the program.

This contract for the Cross River Rail project creates an opportunity for Jacobs and its alliance partners to address current mobility challenges in Australia's third-largest city. Notably, the Queensland Government is investing $3.8 billion for the project.

PPS Segment — Major Growth Driver

The PPS segment, accounting for 61.7% of the company’s revenues, has been a major growth driver for Jacobs. This division serves clients of broad sectors like water, transportation, building and semiconductors.

Recently, the company received a contract from the U.S. Environmental Protection Agency to provide architect engineer services to the Great Lakes National Program Office. Under the five-year Great Lakes Architect Engineer Services II contract, Jacobs’ People & Places Solutions will provide contaminated sediment characterization and remedial design activities, habitat restoration evaluation and design, along with contaminated sediment and habitat restoration remedial construction oversight.

In December 2019, Jacobs’ JV Confluence Water Pty Ltd. inked a $1.4-billion deal to provide design, construction, maintenance and facilities management services to Sydney Water's North region. It also received a contract from National Aeronautics and Space Administration. Per the contract, PPS will provide Environmental compliance, Environmental remediation and Regulatory risk analysis and communications services to Marshall Space Flight Center.

Notably, this segment’s backlog at the end of fourth-quarter fiscal 2019 rose 10% from the year-ago period, depicting its strong revenue growth potential.

Price Performance

Courtesy of strong revenue and earnings performance, shares of Jacobs have surged 54.5% in the past year compared with the industry's 18.8% rise. The price performance is also backed by an impressive earnings surprise history. The company surpassed estimates in three of the trailing four quarters. Also, robust segmental performances, ongoing contract wins and strong backlog are driving growth.

Zacks Rank & Key Picks

Currently, Jacobs carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Two better-ranked stocks in the Zacks Construction sector are North American Construction Group Ltd. (TSX:NOA) and Installed Building Products, Inc. (NYSE:IBP) , each sporting a Zacks Rank #1.

North American Construction has a three-quarter positive earnings surprise of 8.5%, on average.

Installed Building Products has three-five year expected earnings per share growth rate of 16%.

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