Jacobs Engineering Group Inc. J is slated to report fourth-quarter fiscal 2022 results on Nov 21, before market open.

In the last-reported quarter, the company’s earnings and revenues topped the Zacks Consensus Estimate by 1.6% and 2%, respectively. On a year-over-year basis, its earnings rose 13%, and revenues increased 7%.

The leading provider of professional, technical and construction services’ earnings topped the consensus mark in three of the last four quarters, with an average of 1.6%.

Trend in Estimates

For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has dropped to $1.78 from $1.80 in the past 30 days. The estimated figure indicates 12.7% increase from $1.58 per share reported in the year-ago quarter. The consensus mark for revenues is pegged at $3.82 billion, suggesting 6.6% growth from the year-ago quarter’s reported figure of $3.59 billion.

Jacobs Solutions Inc. Price and EPS Surprise

Jacobs Solutions Inc. price-eps-surprise | Jacobs Solutions Inc. Quote

Factors to Note

Jacobs’ fourth-quarter fiscal 2022 performance is likely to have been aided by investments from the U.S. Infrastructure Act and other economic stimuli. Its strategic focus on transforming itself from an engineering and construction firm to a global technology-forward solutions company is expected to get reflected in the to-be-reported quarter’s numbers. Also, a higher-margin backlog, focus on generating efficiencies through digital and technological solutions and solid project execution are expected to have boosted growth.

J has been continuously shifting to digital and leadership in strategic end markets like space exploration, life sciences and cyber and water solutions. Again, the U.S. Department of Defense’s increased focus on strategic data utilization is likely to have driven Jacobs’ growth.

A favorable revenue mix in both People & Places Solutions or P&PS and Critical Mission Solutions or CMS segments and benefits from PA Consulting (which has a solid accretive gross margin profile of nearly 50%) are likely to get reflected in margins.

Segment-wise, higher spending from the transportation sector and accelerated investments toward drinking water, wastewater, flood protection and climate resilience might have aided the company’s fiscal fourth-quarter performance in the P&PS segment (comprising 60% of total revenues in fiscal 2021). Rapid implementation of digital technologies has been optimizing clients’ operational spending and mitigating revenue challenges. Further, environmental and green economy projects remained strong.

For the fiscal fourth quarter, Jacobs expects adjusted EBITDA between $340 million and $360 million (depicting growth from $310 million reported a year ago) and adjusted earnings within $1.75-$1.85 per share (reflecting growth from $1.58 a year ago). On a reported basis, for the fourth quarter, it expects revenue growth in the mid-to-high single digits, which translates into double-digit growth on a constant-currency basis.

Jacobs expects PAs operating margin to return to more than 20% in the fiscal fourth quarter and continues to strengthen further in 2023. It also expects continued double-digit revenue growth on a constant-currency basis.

Jacobs expects gross margins to marginally improve in the fiscal fourth quarter and expand further during fiscal 2023, driven by a higher margin backlog and sales pipeline, favorable revenue mix within CMS, acceleration in P&PS revenue and continued strong PA performance. It also expects G&A (as a percentage of revenue) to be the same sequentially in Q4.

What the Zacks Model Says

Our proven model does not conclusively predict an earnings beat for Jacobs this time around. A combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. Unfortunately, that is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The company has an Earnings ESP of -3.1%.

Zacks Rank: It currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Recent Construction Releases

KBR, Inc. KBR reported third-quarter 2022 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same.

Nonetheless, the increasing global importance of national security, energy security, energy transition and climate change have been acting as major tailwinds for KBR.

EMCOR Group, Inc. EME reported third-quarter 2022 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate and increased year over year.

Given the solid momentum of the business activity amid a challenging macroeconomic environment, the company has lifted its revenues and earnings per share guidance for 2022.

United Rentals, Inc. URI reported third-quarter 2022 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. The company has been gaining from the sustained demand in its end markets and the strength of its core rental business.

URI also lifted its full-year guidance for total revenues and adjusted EBITDA, given broad-based end-market activity, contractor backlogs, customer sentiment and solid visibility.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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
 
KBR, Inc. (KBR) : Free Stock Analysis Report
 
EMCOR Group, Inc. (EME) : Free Stock Analysis Report
 
United Rentals, Inc. (URI) : Free Stock Analysis Report
 
Jacobs Solutions Inc. (J) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research