Jacobs Engineering Group Inc. (JEC) was awarded a five-year $8.5 million contract by the United States Army’s Software Engineering Center (SEC).
 
The company will be providing management, security, training and documentation related services to the Army under the agreement.
 
Jacobs is one of the world’s largest and most diverse providers of technical, professional and construction services. Jacobs’ diversification across markets, geographies and services helps generate growth in the present sluggish environment.
 
The company plans to expand into emerging markets like India, China and the Middle East. The emerging markets are expected to outperform the developed markets in the coming years.
 
Jacobs’ track record of contract wins together with a healthy liquidity position of $743 million at the end of the second quarter of fiscal 2010 will help it to sustain in the present economic turmoil.
 
However, the very cyclical nature of the company and its excessive dependence on a few large customers is risky. In 2009, 20.3% of its revenues were generated from agencies of the U.S. federal government.
 
Jacobs is also subject to significant fluctuations due to a wide variety of uncontrollable factors, including economic conditions and changes in client spending, particularly during periods of economic uncertainty. Thus, we reiterate our Neutral recommendation on the stock.
Read the full analyst report on “JEC”
Zacks Investment Research