Jacobs (JEC) Poised to Grow on Divestitures, Contract Wins

Jacobs Engineering Group Inc. JEC recently divested 40% interest in Neste Jacobs Oy and also secured a contract extension from the United States Air Force Communication, Navigation, Surveillance/Air Traffic Management (CNS/ATM). Shares of this Zacks Rank #3 (Hold) company were up nearly 1.1% to $58.79 as of Oct 2, after news of the contract extension surfaced.

Jacobs intends to boost is profitability on the back of active portfolio management, strategic acquisitions and balanced organic growth.

In sync with this, Jacobs recently (Sep 29, 2017) divested 40% interest of its joint venture business — Neste Jacobs Oy — to Neste Corporation, for an undisclosed amount. Henceforth, Neste Corp. will hold all shares of Neste Jacobs Oy.

In addition, on Sep 28, Jacobs secured a contract extension for the software development of the United States Air Force Communication, Navigation, Surveillance/Air Traffic Management (CNS/ATM). The deal, worth $34.6 million, will likely have a tenure of more than five years, if all options work out.

Since the beginning of this September, Jacobs has secured contracts from Evonik Industries, the Department of Energy National Nuclear Security Administration (NNSA), Aerie Pharmaceuticals, Inc. AERI and Ferring Pharmaceuticals Inc. Notably, Jacobs has also signed an agreement (Aug 7, 2017) to acquire CH2M HILL Companies Ltd., which is in sync with its efforts to become a $15 billion global solutions provider over the long run.

Jacobs quotes competitive prices for its contracts and ensures that the number of contract receipts increases over time. Notably, higher transportation spending of the government authorities of Australia, the U.K. and the United States has largely increased the company’s contract winning opportunities.

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Better-ranked stocks in the same space are listed below:

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