Rating Change #4
Jacobs Engineering Group (JEC) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins.
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Highlights from the ratings report include:
- JACOBS ENGINEERING GROUP INC has improved earnings per share by 12.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, JACOBS ENGINEERING GROUP INC increased its bottom line by earning $2.94 versus $2.60 in the prior year. This year, the market expects an improvement in earnings ($3.30 versus $2.94).
- Despite its growing revenue, the company underperformed as compared with the industry average of 9.8%. Since the same quarter one year prior, revenues slightly increased by 2.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- JEC's debt-to-equity ratio is very low at 0.14 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, JEC has a quick ratio of 1.94, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has significantly increased by 106.55% to $158.11 million when compared to the same quarter last year. In addition, JACOBS ENGINEERING GROUP INC has also vastly surpassed the industry average cash flow growth rate of 32.52%.
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