Jacobs Wins $5.4M Contract - Analyst Blog

Jacobs Engineering Group Inc. (JEC) has recently won a two-year contract of $5.4 million from the Force Protection Products Division (ZI) of the Air Force Cryptologic Systems Group (CPSG) at Lackland Air Force Base, Texas.

According to the agreement, Jacobs is supposed to provide maintenance as well as technical support at the Lackland Air Force Base including other locations in San Antonio, and Whiteman Air Force Base, Mo. The contract also requires repairs and logistics services for the above division.

The company is one of the world’s largest providers of technical, professional and construction services.

Despite unfavorable market conditions, we expect the number of new contracts and strict cost control measures to help the company perform well. Moreover, Jacobs’ diversification across markets, geographies and services will help generate growth in the present sluggish environment.

Jacobs’ cost control initiative helps deliver superior technical, professional, and construction services safely, efficiently, and within the cost and time parameters of its clients. The ongoing acquisition strategy will also help strengthen its position in future.

However, the very cyclical nature of its business and a highly competitive environment necessitate a Hold. Some of its immediate competitors include Fluor Corp. (FLR), Foster Wheeler AG (FWLT), KBR Inc. (KBR), Technip (TEC), and Lockheed Martin Corp. (LMT). Thus, we recommend “Neutral” for the stock.