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Why Did Jacobs Engineering Group’s Income Fall in 4Q15?

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Dec. 4 2020, Updated 10:52 a.m. ET

Price movement of Jacobs Engineering Group

Jacobs Engineering Group (JEC) has a market cap of $5.4 billion. JEC’s YTD (year-to-date) price movement was a mix of rises and falls in fiscal 2015. After the earnings report, JEC rose by 2.7% to close at $43.54 per share as of November 23, 2015. The price movement on a weekly, monthly, and YTD basis is 5.0%, 9.5%, and -2.6%, respectively.

Technically, the stock has broken the support of its 20-day, 50-day, and 200-day moving averages throughout 2015. Currently, JEC is trading 6.5% above its 20-day moving average, 9.6% above its 50-day moving average, and 3.2% above its 200-day moving average.

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The First Trust ISE Global Construction and Engineering ETF (FLM) invests 2.9% of its holdings in Jacobs Engineering Group. The ETF tracks an index of global construction and engineering weighted in tiers spanning the entire market cap spectrum. The YTD price movement of FLM is 3.2% as of November 20, 2015. The Guggenheim S&P 500 Pure Value ETF (RPV) invests 1.6% of its holdings in Jacobs Engineering Group.

The market cap of Jacobs Engineering Group’s (JEC) competitors are as follows:

  • Fluor Corporation (FLR) — $6.8 billion
  • Aecom (ACM) — $4.7 billion
  • KBR (KBR) — $2.7 billion
  • Tetra Tech (TTEK) — $1.6 billion

Performance of Jacobs Engineering Group in fiscal 4Q15 and fiscal 2015

Jacobs reported fiscal 4Q15 revenue of $3,117.0 million, a fall of 3.1% when compared to revenue of $3,218.4 million in fiscal 4Q14. Revenue of technical professional services rose by 0.24% and revenue of field services fell by 8.0% in fiscal 4Q15 as compared to the prior-year period. The company’s operating profit fell to $53.8 million in fiscal 4Q15, a fall of 60.6% compared to fiscal 4Q14. Its net income and EPS (earnings per share) fell to $29.9 million and $0.24, respectively, in fiscal 4Q15, as compared to net income and EPS of $86.1 million and $0.65, respectively, in fiscal 4Q14.

In fiscal 4Q15 and fiscal 2015, the company repurchased 1.2 million and 9.7 million shares, respectively, at a total cost of $49.4 million and $422.3 million, respectively.

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Fiscal 2015 results

In fiscal 2015, the company reported revenue of 12,114.8 million, a fall of 4.6% YoY (year-over-year). Revenue from technical professional services rose by 2.2% and revenue of field services fell by 13.8% in fiscal 2015. The company’s operating profit fell to $445.5 million in fiscal 2015, a fall of 15.6% on a yearly basis. Its net income and EPS fell to $303.0 million and $2.40, respectively, in fiscal 2015, as compared to net income and EPS of $328.1 million and $2.48, respectively, in fiscal 2014.

Meanwhile, Jacobs’ cash and cash equivalents and working capital fell by 37.1% and 15.6%, respectively, in fiscal 2015. The company’s technical professional services backlog fell to $11,692.4 million, and its field services backlog rose to $7,114.2 million in fiscal 2015, as compared to technical professional services backlog and field services backlog of $12,607.0 million and $5,773.0 million, respectively, in fiscal 2014.

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According to Kevin C. Berryman, Jacobs’ CFO, “While ongoing headwinds influenced both domestic and international markets, our proactive efforts to better align our operations and reduce costs translated into stable adjusted EPS throughout the year. In 2016, the full realization of the expected cost savings is expected to mitigate negative pressure in certain end markets, resulting in our EPS guidance for the 2016 fiscal year being in the range of $2.80 to $3.30.”

About Jacobs Engineering Group

Jacobs Engineering Group provides technical professional and construction services.

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