Jacobs (JEC) To Report Q4 Earnings: What's In The Offing?

Premium technical services company Jacobs Engineering Group Inc. (NYSE:JEC) is scheduled to report fourth-quarter fiscal 2017 (ended Sep 30, 2017) results before the market opens on Nov 21.

The company’s earnings in third-quarter fiscal 2017 came in at 79 cents, in line with the Zacks Consensus Estimate. However, the company delivered a positive average earnings surprise of 4.77%, over the preceding four quarters.

Over the last month, Jacobs’ shares yielded a return of 0.5%, as against the 1.8% loss incurred by the industry.

Let’s see how things are shaping up prior to this announcement.

Factors at Play

Elevated infrastructure spending in the United States and recovering economic conditions in China (a major industrial end-market) are anticipated to boost demand for Jacobs’ premium engineering and construction management services, going forward. The company also believes its strategic restructuring moves will continue to reduce it operational costs in the near term.

In addition to the above, Jacobs has been steadily enhancing its business and brand status on the back of prestigious contract wins. In the last few months, the company has secured several contracts from renowned institutions and public-sector agencies like the Shell (LON:RDSa) Oil Company, Chevron (NYSE:CVX) Products Company, the U.S. Army, EQUATE Petrochemical Company, TransCanada Corporation and Sellafield Ltd. Notably, higher transportation spending of the government authorities of Australia, the U.K. and the United States has largely increased Jacobs’ contract winning opportunities.

However, turbulence in the oil and gas market is expected to hurt the company’s Petroleum & Chemicals segment’s performance in the quarter to be reported and even after. Moreover, disappointing field services revenues might adversely affect the company’s Industrial segment’s business. Jacobs also believes reduced public spending in the U.K. will thwart its revenues and profitability in the fiscal fourth quarter.

We also fear that other headwinds such as intense industry rivalry or adverse foreign currency translation impact might weigh over Jacobs’ top- and bottom-line performances in the soon-to-be-reported quarter.

Based on the current market conditions, the company projects earnings in the range of $3.00-$3.15 per share for fiscal 2017.

Earnings Whispers

Our proven model does not conclusively show that Jacobs is likely to beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as we will see below.

Zacks ESP: Jacobs currently has an Earnings ESP of -3.11%. This is because the Zacks Consensus Estimate of 83 cents is higher than the Most Accurate estimate of 80 cents.

Jacobs Engineering Group Inc. Price and EPS Surprise

Jacobs Engineering Group Inc. Price and EPS Surprise | Jacobs Engineering Group Inc. Quote

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Jacobs carries a favorable Zacks Rank #2 but a negative ESP makes surprise prediction difficult.

It should be noted that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks that Warrant a Look

Here are some stocks within the industry that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

KB Home (NYSE:KBH) , with an Earnings ESP of 0.33% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Winnebago Industries, Inc. (NYSE:WGO) , with an Earnings ESP of +1.91% and a Zacks Rank #1.

TRI Pointe Group, Inc. (NYSE:TPH) , with an Earnings ESP of +0.39% and a Zacks Rank #2.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>