Jacobs Engineering Meets Expectations but Disappoints The Street

Includes: FLR, JEC
by: TraderMark

An adverse reaction Tuesday morning to former fund holding the Jacobs Engineering Group (NYSE:JEC) earnings report. It looks like they met expectations for this quarter but cut the full year - it is sort of ironic really; they are doing far better in sum total than many companies jumping 20 to 30% on earnings, but they did not lower the bar to such an extreme level as many of those companies. Such is the way of the market.

If the globe is recovering, this is the type of company that should start seeing their long term projects (backlog) start to pick up. This reaction is especially bemusing because all the world's hopes are on (a) government backstops and (b) government infrastructure projects. Fluor (NYSE:FLR) and Jacobs Engineering (JEC) are the best-of-breed names with the broadest portfolios, so I'm keeping my eye on them for "green shoots".

Via Reuters

  • U.S. construction services firm Jacobs Engineering Group Inc (JEC) posted a higher quarterly profit, but cut its 2009 earnings forecast, even as its backlog for orders grew 2.5 percent. Jacobs slashed its earnings estimate to a range of $3.10 to $3.50 a share, from a prior forecast of $3.55 to $3.90 a share.
  • For the second quarter ended March 31 2009, the company earned $109.3 million, or 88 cents per share, compared with $99.3 million , or 80 cents a share. Revenues rose about 12 percent to $2.98 billion from $2.66 billion.
  • "While we viewed a downward revision in 2009 guidance as likely on energy markets pressure, we are slightly surprised by the extent of the cut," Keybanc Capital Markets analyst Tahira Afzal said in a note.
  • Goldman Sachs analyst Joe Richie said the magnitude of the guidance cut is somewhat perplexing given an in-line earnings quarter and better-than-expected awards.
  • FBR Capital Markets analyst Alex Rygiel said calculated new awards were $4.5 billion during the quarter. FBR's Rygiel said investors will remain concerned about backlog declining due to the company's exposure to the global oil, gas and chemical markets, which represent about 55 percent of its total revenue.

Full report here

  • Commenting on the results for the second quarter, Jacobs President and CEO Craig L. Martin stated, "We have produced positive earnings growth on a quarter-over-quarter basis for the last 15 straight quarters, so we are disappointed to report earnings below that of last quarter. That being said, the second quarter was a good one in many ways. Our earnings remain good and exceed year-ago earnings by 10%. Our backlog grew quarter-over-quarter and year-over-year in a very complex market. Going forward, we expect the markets to remain complex. Our public sector business remains strong, while the heavy process business is highly uncertain."

Jacobs, with annual revenues exceeding $12 billion, is one of the world's largest and most diverse providers of technical, professional, and construction services.

[Jan 27, 2009: Jacobs Engineering - Solid Earnings Report]

[Jan 21, 2009: Jacobs Engineering Continues Reels After Suncor Spending Cuts]

[Dec 3, 2008: Back of Envelope Look at Infrastructure Stocks]

[Nov 4, 2008: Business as Usual at Jacobs Engineering]

[Jul 22, 2008: Jacobs Engineering Earnings]

[Apr 22, 2008: Good Earnings Report from Jacobs Engineering]

[Oct 7, 2007: Sector Focus - Infrastructure]

Disclosure: No position