Jacobs Engineering Group Inc. (JEC) recently announced receipt of a contract from Arkema Inc. to provide engineering procurement and construction management (EPCM) services. The two projects under the contract include an acrylic acid expansion and a methyl acrylate project, at the company's Clear Lake, Texas operations.
Arkema is a global chemical company and France's leading chemicals producer. The contract is expected to support Arkema’s projects, which are targeted toward future expansion of the chemical industry.
Jacobs presently has a significant market share, as part of huge global infrastructure market and is able to compete at an attractive price ratio compared to some of its established competitors. The company also banks on the strategy of expansion into the emerging markets like China, Australia, Brazil, the Asian countries through joint ventures and contract wins, diversifying into sectors like oil and gas, mining, IT services and power.
On this backdrop, Jacobs’ various strategic contracts wins from the federal governments of UK, US and beyond, diversifying across sectors and geographies have proved favorable for the company’s growth. Of late, the company signed contracts with seven clients in the Alberta Oil Sands to support steam assisted gravity drainage (SAGD) and bitumen upgrading expansion projects. Jacobs has also been awarded an extension contract for current marine environmental services by Horizon Nuclear Power Limited, UK.
Thus, Jacobs’ prospective list of contracts, its diversification across markets, geographies and services is expected to strengthen Jacobs’ position further in the infrastructure market and generate growth even in a competitive environment.
Jacobs Engineering Group, one of the world's largest and most diverse providers of technical, professional, and construction services, serves a variety of industrial, commercial and government clients across a global network. The company directly competes with its peers, such as Fluor Corporation (FLR) and Foster Wheeler AG (FWLT).
We currently hold a Neutral recommendation on the stock. Jacobs has a Zacks #3 Rank, implying a short-term (1-3 months) Hold rating.
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