QUOTE AND NEWS
Market Intelligence Center  May 4  Comment 
For a hedged play on Jacobs Engineering Group Inc. (JEC) MarketIntelligenceCenter.com’s patented trade-picking algorithms recommend the Jul. '15 $42.50 covered call for a net debit in the $40.90 area. That is also the break-even stock price for...
Motley Fool  Apr 28  Comment 
A drop in sales has made investors lose confidence in this engineering company today.
Forbes  Apr 28  Comment 
In early trading on Tuesday, shares of Iron Mountain (IRM) topped the list of the day's best performing components of the S&P 500 index, trading up 6.0%. Year to date, Iron Mountain has lost about 0.7% of its value.
newratings.com  Apr 28  Comment 
WASHINGTON (dpa-AFX) - Jacobs Engineering Group Inc. (JEC) reported that net earnings for the second quarter declined to $81.97 million or $0.64 per share from $83.46 million or $0.63 per share in the prior-year quarter. Excluding items, adjusted...
Forbes  Apr 24  Comment 
Wall Street is expecting lower profit for Jacobs Engineering when the company reports its second quarter results on Tuesday, April 28, 2015. Analysts are expecting earnings per share of 79 cents after the company booked a profit of 82 cents a...
Market Intelligence Center  Apr 10  Comment 
Jacobs Engineering Group Inc. (JEC) presents a trading opportunity that offers a 3.93% return in just 98 days. A covered call on Jacobs Engineering Group at the $45.00 level expiring on Jul. '15 offers an assigned return rate of 3.93% or 14.62%...
Market Intelligence Center  Apr 6  Comment 
After Thursday’s trading in Jacobs Engineering Group Inc. (JEC) the option-trade picking algorithms that power MarketIntelligenceCenter.com's Artificial Intelligence Center uncovered a trade that offers a 3.46% return, or 12.37% annualized (for...
Market Intelligence Center  Mar 24  Comment 
Jacobs Engineering Group Inc. (JEC) presents a trading opportunity that offers a 2.76% return in just 115 days. A covered call on Jacobs Engineering Group at the $42.50 level expiring on Jul. '15 offers an assigned return rate of 2.76% or 8.75%...
Benzinga  Mar 24  Comment 
Jacobs Engineering Group Inc. (NYSE: JEC) announced today that it was awarded a contract by Network Rail to support its proposed new rail link from the west of England to London Heathrow airport, United Kingdom. The proposed Western Rail Access...




 

Jacobs Engineering Group (NYSE: JEC) designs and builds refineries, pharmaceutical manufacturing and chemical plants and other types of technically sophisticated facilities for its clients. For instance, the company is responsible for designing all aspects (power/steam generation, underground infrastructure, and tank farm) of a bitumen-collection facility in the oil sands of Fort Hill, Canada. In addition to facility design, the company provides both engineering and consulting services. In its role as NASA's primary services support contractor, the company helps design, test, and analyze space-and aircraft components.

Rising demand for oil has benefited the company in over the last few years. Although the company serves a number of different industries, its biggest source of revenue are refiners and oil exploration and production companies, which the company helps with expanding existing refineries and extracting more oil from existing wells. As oil prices rises, demand for JEC's services also increases.

Business Overview

Business & Financial Metrics[1]

In 2009, JEC generated a net income of $399.9 million on revenues of $11.47 billion. This represents a 5.0% decrease in net income and a 1.9% increase in total revenue from 2008, when the company earned $420.7 million on $11.25 billion in revenue.

Business Segments[2]

Jacobs has only one reportable segment but breaks down its revenue in terms of geographic region. Well over half of the company's revenues come from customers in the United States.

IMAGE:JEC-Geo2009.jpg[2]

Trends and Forces

US Government Spending Impacts JEC less than competitors

Contracts with the United States government--principally through the Department of Defense (DOD), the Department of Energy (DOE), and the Department of Transportation (DOT)--accounted for 20.3% of Jacobs' total revenues in 2009.[3] While this exposure is less than some of Jacobs' competitors it still represents a significant portion of the company's total yearly services and puts the company at risk of volatility in government spending. The US budget varies heavily from year to year depending on tax revenues, the party in power, military realities, and public's perception of the social worth of any given project. This volatility has the potential to impact Jacob's future revenues, either through adjustments in the number of new contracts awarded or the extent to which old contracts are completely funded and expanded upon.

The Continued Profitability of Name-Brand Prescription Drugs Essential for Jacobs' Pharmaceutical Projects

While Jacobs' relatively small client base can be beneficial, it can also prove troublesome in shifting markets. This would quickly become apparent in the company's projects for the Pharmaceutical industry if new name-brand prescription drugs lost their traditional profitability. Through the 2000's the price of prescription drugs rose steadily, prompting many politicians to consider measures limiting prices or shortening the length of patent protection on these drugs. Any measure of this type would inevitably reduce the profitability of new drugs coming to market, and this would have a dampening effect on development and production efforts on the part of the name-brand drug manufacturers. In 2009, Jacobs received nearly 10% of total revenues from projects for the pharmaceutical and biotechnology industries for services ranging from construction of new labs and plants to maintenance of production facilities.[4] Any spending cuts on these types of projects would have a significant negative impact on Jacobs' earnings. While government price-capping actions would have a positive effect on the generic drug market, Jacobs' ties to the major manufacturers would prevent it from quickly capitalizing on this growth.


Competition

Competitors by Primary Service Market

Jacobs breaks its competitive markets down into four categories: a broad market: Engineering, Construction, and Maintenance (ECM); and then more specific Buildings; Infrastructure; and U.S. Federal Programs.

References

  1. JEC 2009 10-K pg. F-4  
  2. 2.0 2.1 JEC 2009 10-K pg. F-29  
  3. JEC 2009 10-K pg. 21  
  4. JEC 2009 10-K pg. 37  
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