On Nov 30, 2015, we issued an updated research report on the premium technical services company Jacobs Engineering Group Inc. JEC. The firm is one of the leading providers of professional, technical and construction services to industrial, commercial and governmental clients. It has a wide global network of branches, generating a considerable number of employment opportunities around the world.
Scopes for Improvement
Greater degree of industrialization in contemporary economies has enhanced the extent of construction activities. This, in turn, is increasing the demand for Jacobs' services over time. The company continues to grow on the back of strategic restructuring programs and cost-saving schemes.
Armed with record backlog levels and tactical service-diversification plans, the company has been steadily reinforcing its business over time. Going forward, we believe that the company would improve its revenues with the help of several organic deals.
Risk Factors
Persistent weakness in global commodity and energy prices has been weighing on Jacobs’ revenues and margins in recent times. Moreover, constant appreciation of the U.S. dollar with respect to other major currencies such as Euro and Yen continues to hurt the company's international trade.
Further, low-entry barriers in engineering, architectural, consulting and designing market segments have triggered stiff rivalry in the industry. As a result, poor competency or operational inefficiencies might diminish Jacobs’ market share and profitability from such business segments in the long run.
Stocks to Consider
Jacobs currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include KBR, Inc. KBR, On Assignment Inc. ASGN and Booz Allen Hamilton Holding Corp. BAH. All three stocks hold a Zacks Rank #2 (Buy).
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