Jacobs Engineering (JEC) Secures Role In KL-SG HSR Project

Jacobs Engineering Group Inc. (NYSE:JEC) recently won a planned Reference Design Consultant (RDC) package deal from the Malaysian transportation authorities.

The RDC package deal secured by Jacobs is one among the six coveted to accomplish the prestigious Kuala Lumpur-Singapore High Speed Rail venture (KL-SG HSR). The project was first announced in September 2010 by the Malaysian Prime Minister, who discussed its purpose to connect Johor Bahru and Kuala Lumpur with Singapore. This 350-kilometer rail link will enable travelers complete the journey between Kuala Lumpur and Singapore within a short span of 90 minutes. Construction of the project commenced early this year and is anticipated to close by 2026.

Per the RDC deal, Jacobs will design five intermediate rail stations in Malaysia. The company will also provide other HSR infrastructure services, such as developing stations and encircling the same with access highway, roads and pedestrian links.

Existing Scenario

Challenging energy market conditions, lackluster field services business and reduced public spending in the UK are expected to dent Jacobs’ near-term results. Notably, over the last month, the company’s shares lost 5.11%, wider than the 2.30% loss incurred by the industry.

In addition, over the last 30 days, the Zacks Consensus Estimate for Jacobs moved south for both fiscal 2017 and 2018, reflecting negative market sentiments.

However, this Zacks Rank #3 (Hold) company is poised to combat headwinds on the back of diligent business contracts and strategic restructuring moves. In addition, Jacobs recently (Aug 7, 2017) inked an agreement to acquire CH2M HILL Companies Ltd. (CH2M), in a bid to become a $15-billion global solutions provider. This transaction is likely to reinforce the company’s competency in the contemporary design, engineering, consulting and construction market, moving ahead.

Furthermore, we believe that the above mentioned deal will boost Jacobs’ organic growth trajectory in the near term.

Stocks to Consider

A few better-ranked stocks in the industry are listed below:

KB Home (NYSE:KBH) recorded an average positive earnings surprise of 12.47% over the trailing four quarters and currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

NVR, Inc. (NYSE:NVR) currently sports a Zacks Rank #1 and has an average positive earnings surprise of 14.19% for the last four quarters.

Potlatch Corporation (NASDAQ:PCH) also flaunts a Zacks Rank #1 and recorded an average positive earnings surprise of 41.16% over the past four quarters.

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