Jacobs (JEC) Beats Q1 Earnings Estimates, Raises FY18 View

Jacobs Engineering Group Inc. (NYSE:JEC) reported impressive results for first-quarter fiscal 2018 (ended Dec 29, 2017).

Earnings/Revenues

Adjusted earnings in the reported quarter came in at 77 cents per share, beating the Zacks Consensus Estimate of 67 cents. The bottom line also came in higher than the year-ago tally of 68 cents per share.

Revenues improved to $2,750.3 million from 2,551.6 million recorded in the prior-year quarter. The top line exceeded the Zacks Consensus Estimate of 2,563 million.

Segment Details

Aerospace & Technology’s quarterly sales jumped 25% to $721.5 million. Buildings & Infrastructure sales climbed 13.4% year over year $658.5 million.

However, Industrial segment revenues edged down 0.3% year over year to $749.3 million. Also, revenues of the Petroleum & Chemicals segment came in at $621 million, down 3.2% year over year.

Costs/Margin

Direct cost of contracts, a major expenditure for Jacobs, increased 6.1% year over year to $2,263.1 million. Gross margin in the reported quarter came in at 17.7% compared with 16.4% reported in the year-ago quarter.

Selling, general and administrative expenses flared up approximately 32.9% year over year to $439.5 million. Operating margin was 1.7% for the quarter compared with 3.5% in the prior-year quarter.

At the end of the reported quarter, the company’s backlog came in at a record high of $26.2 billion.

Balance Sheet

At the end of the fiscal first quarter, Jacobs’ cash and cash equivalents were approximately $1,059.8 million compared with $774.2 million as of Sep 29, 2017. Long-term debt was $2,587.9 million compared to $235 million as of Sep 29, 2017.

The company’s capital expenditure for the fiscal first quarter totaled $22.5 million compared with $21.1 million witnessed in the year-earlier quarter.

Outlook

Jacobs raised its adjusted earnings guidance for fiscal 2018 to the $3.85-$4.25 per share range, higher than the previously estimated range of $3.55-$3.95 per share. This Zacks Rank #2 (Buy) stock has lifted its view backed by the benefits secured from the recent U.S. tax reform. Jacobs is poised to grow on the back of solid segmental performance and the CH2M buyout benefits.

Other Stocks to Consider

Some other top-ranked stocks in the industry are listed below:

Boise Cascade, L.L.C. (NYSE:BCC) currently sports a Zacks Rank of 1 (Strong Buy). The company has pulled of an impressive average positive earnings surprise of 116.28% over the last four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.

CalAtlantic Group, Inc. (NYSE:CAA) flaunts a Zacks Rank of 1. The company generated an average positive earnings surprise of 5.64% over the preceding four quarters.

TopBuild Corp. (NYSE:BLD) carries a Zacks Rank of 2. The company has recorded an average positive earnings surprise of 10.33% during the same time frame.

Zacks Top 10 Stocks for 2018

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?

Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp (NYSE:FMC). and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.

Access Zacks Top 10 Stocks for 2018 today >>