Morningstar | Jacobs Engineering Slightly Raises EPS Guidance for Fiscal-Year 2019; Fair Value Estimate Intact
We maintain our $75 fair value estimate for Jacobs Engineering after the no-moat engineering and construction firm reported mixed results in the first quarter of its fiscal 2019, beating consensus adjusted EPS estimates but falling short on revenue and GAAP EPS. Management remains upbeat about the rest of the year and raised its EPS guidance for full-year fiscal 2019 to $5.10-$5.50 from $5.00-$5.40. This announcement does not materially alter our outlook for the firm as we previously forecast full-year adjusted EPS of $5.32. Based on first-quarter results and updated guidance, we modestly raised our EPS projection to $5.35 but our $75 per share fair value estimate remains unchanged.First-quarter pro forma revenue (excluding the recently divested energy, chemicals, and resources segment) grew 12% year over year, while adjusted operating profit margin increased by over 75 basis points from the same period last year. Revenue growth was fueled by the aerospace, technology, and nuclear segment, which delivered a 23% increase in sales from the same prior-year period. Jacobs continues to return cash to shareholders, as the company repurchased over $200 million of shares in the first quarter and increased its quarterly dividend by 13% from $0.15 to $0.17.
Cost synergies from the CH2M acquisition remain ahead of schedule and management expects to achieve its $175 million run-rate target by the end of fiscal 2019. We believe that the CH2M acquisition, coupled with the recent sale of the energy, chemicals, and resources business to WorleyParsons (expected to close before June 30), will result in a less cyclical portfolio, with lower exposure to commodity markets.
Jacobs Engineering Group provides services including consulting, technical, scientific and project delivery for the government and private sector. The company's lines of business are: Critical Mission Solutions, which provides cybersecurity, data analytics, software application development, enterprise and mission information technology, systems integration and other technical consulting solutions to government agencies as well as aerospace, automotive and telecom customers; and People and Places Solutions, which provides end-to-end solutions for its clients' projects, whether connected mobility, water, smart cities, manufacturing or the environment.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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