Jacobs Engineering Group Inc. (JEC) signed a four-year contract with Transport Scotland, the national transport agency of Scotland, to provide engineering consultancy services.
Transport Scotland oversees the operation and improvement of the trunk road and railway networks in Scotland. As part of the four-year framework, Jacobs will provide engineering services ranging from feasibility studies and environmental appraisals through to the procurement and supervision of the construction of projects on site.
The frameworks will be used to assist Transport Scotland in the development of transport infrastructure projects, in particular those identified by its Strategic Transport Projects Review, which describes how Scotland’s transport needs should be addressed over the next 20 years.
With annual revenues exceeding $11 billion, Jacobs is one of the world’s largest and most diverse providers of technical, professional and construction services. Its major competitors are Foster Wheeler AG (FWLT) and Fluor Corp. (FLR).
Jacobs is also planning to expand and consolidate in India, China, and Middle East. Jacobs’ diversification in terms of markets, geography and services will continue to facilitate future growth.
Jacobs’ cost-control initiatives help deliver superior technical, professional and construction services safely, efficiently and within the cost and time parameters of clients. Moreover, Jacobs’ ongoing acquisition strategy will help strengthen its position in future.
However, the very cyclical nature of its business, as well as its heavy dependence on third parties, is discouraging. The company also operates in a highly competitive environment. Thus, we maintain our Underperform rating on the stock.
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