Jacobs (JEC) To Serve Woodside's KGP Project In Australia

Jacobs Engineering Group Inc. (NYSE:JEC) has clinched an agreement with one of Australia's leading LNG operators, Woodside Energy Limited, for the Karratha Gas Plant (“KGP”) in the Western part of the country.

Under this three-year agreement, Jacobs is entitled to provide brownfields engineering and procurement services for Australia’s KGP, which is one of the most advanced integrated gas production systems in the world, servicing the country's largest oil and gas development, the North West Shelf Project.

Jacobs has also been providing engineering and consulting services to Woodside across its portfolio of assets in Western Australia.

Meanwhile, management of Jacobs’ Energy, Chemicals and Resources or ECR business unit believes that the long-term brownfields sustaining capital programs of the company enable it to support the entire program life cycle for Woodside's KGP.

Efficient project execution has been one of the main characteristics driving Jacobs’ performance over the past few quarters. Series of contract wins and its solid backlog serve as testimony to the fact. Notably, this construction and technical services company has outperformed its industry year to date.

Backlog at the end of fiscal 2018 was $27.3 billion, increasing 38% year over year on a reported basis and 2% on a pro-forma basis. Meanwhile, its increased focus on higher-margin line of businesses, namely Aerospace, Technology, Environmental and Nuclear (“ATEN”) and Buildings, Infrastructure and Advanced Facilities (“BIAF”), will help Jacobs boost profitability in the coming quarters. To that end, in October 2018, the company agreed to offload its ECR business unit to Australia’s WorleyParsons Ltd. The deal is expected to close in the first half of calendar 2019.

Zacks Rank & Key Picks

Currently, Jacobs carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the Zacks Construction sector include KBR, Inc. (NYSE:KBR) , Altair Engineering Inc. (NASDAQ:ALTR) and EMCOR Group, Inc. (NYSE:EME) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

KBR surpassed earnings estimates in three of the past four quarters, delivering average positive surprise of 12.6%.

Altair’s earnings are expected to grow 23.1% in 2018.

EMCOR’s earnings for the current year are expected to increase 20%.

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