Premium technical services company Jacobs Engineering Group Inc. JEC is scheduled to report first-quarter fiscal 2016 results before the opening bell on Feb 3, 2016. For the last four quarters, the company generated a positive average earnings surprise of 6.55%. Jacobs aims to improve its revenues and margins on the back of a unique customer-centric model. Let’s see how things are shaping up prior to this announcement.
Factors to Influence Q1 Results
Jacobs remains keen on driving growth through tactical restructuring programs. The company intends to improve profitability with strategic cost-saving plans and record backlog levels.
However, weakening prices of energy resources has been lowering the demand for Jacobs’ offerings in recent times. Depreciating demand continues to exert pressure on the company’s commodity and service prices, which, in turn, is reducing the rate of capital expenditure. We believe that reduced capital expenditure of integrated oil companies would weigh on Jacobs’ backlog in fiscal 2016. Moreover, the company anticipates decline in commodity prices as well as soft demand from the Chinese market to considerably affect its revenues in fiscal 2016. Also, a continuously appreciating U.S. dollar hurts Jacobs’ earnings and margins in international markets.
Earnings Whispers
Our proven model does not conclusively state that Jacobs is likely to beat 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 an earnings beat. That is not the case here as we will see below.
Zacks ESP: Jacobs has a negative Earnings ESP of 2.90% for the current quarter, as the Most Accurate estimate of 67 cents stands below the Zacks Consensus Estimate of 69 cents.
Zacks Rank: Jacobs Zacks Rank #4 (Sell) decreases the predictive power of earnings ESP. This, when combined with a negative ESP, predicts an earnings miss.
Note that we caution against stocks with Zacks Ranks #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revision.
Stocks to Consider
Here are some companies you may want to consider instead, as our model shows these stocks have the right combination of elements to post an earnings beat this quarter:
RealD Inc. RLD, with an Earnings ESP of +46.15% and a Zacks Rank #2.
ServiceMaster Global Holdings, Inc. SERV, with an Earnings ESP of +3.23% and a Zacks Rank #2.
Deluxe Corp. DLX, with an Earnings ESP of +0.88% and a Zacks Rank #2.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment