Will Q3 Earnings Hold A Surprise For Jacobs (JEC) Stock?

Premium technical services company Jacobs Engineering Group Inc. (NYSE:JEC) is scheduled to report third-quarter fiscal 2016 results before the opening bell on Aug 9.

In the last four quarters, the company delivered a positive average earnings surprise of 14.92%. Let’s see how things are shaping up prior to this announcement.

Factors to Play

Jacobs’ business exposure in diversified end markets is expected to reinforce financials in the fiscal third quarter.

The company’s strong Life Sciences’ business, which is backed by increased investments of biopharmaceutical majors, is expected to boost results in the upcoming quarter. Also, higher demand for phosphate fertilizers and strategic investments made in rail, aviation as well as infrastructure markets are expected to boost Jacobs’ revenues. Moreover, the company’s new contracts are likely to bear fruit in the upcoming quarter. Jacobs also believes that its tactical operational efficacy enhancement programs would help in widening margins in the fiscal third quarter.

However, persistence of several headwinds within the construction industry might hurt the company’s results. For instance, weak energy and mining market conditions are currently hindering growth for industrial or construction companies like Jacobs. This is because, low prices of oil and core metals have forced energy and mining companies to postpone, reduce or even cut investments. At the same time, a stronger U.S. currency might weigh on Jacobs’ foreign revenues and earnings in the to-be-reported quarter.

Share price of the company as of Aug 4, 2016 was $53.01 per share. We expect the release of fiscal third-quarter results to lead to stock price movement in the near term.

Earnings Whispers: Our proven model does not conclusively state that Jacobs is likely to beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this. That is not the case here as we will see below.

Zacks ESP: Jacobs has an Earnings ESP of 0.00% for the quarter, as both the Most Accurate Estimate and Zacks Consensus Estimate are currently pegged at 74 cents.

Zacks Rank: Jacobs holds a favorable Zacks Rank #2. However, a 0.00% ESP makes surprise prediction difficult.

Note that we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

Here are some companies you may want to consider as our model shows these stocks have the right combination of elements to post an earnings beat this quarter:

PGT, Inc. (NASDAQ:PGTI) , with an Earnings ESP of +13.33% and a Zacks Rank #2.

Boise Cascade Company (NYSE:BCC) , with an Earnings ESP of +19.15% and a Zacks Rank #2.

Masco Corporation (NYSE:MAS) , with an Earnings ESP of +2.33% and a Zacks Rank #2.

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