NEW YORK (
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and poor profit margins.
Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 14.6%. Since the same quarter one year prior, revenues slightly increased by 5.7%. 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 0.15 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 1.68, which demonstrates the ability of the company to cover short-term liquidity needs.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Construction & Engineering industry average. The net income increased by 4.6% when compared to the same quarter one year prior, going from $80.25 million to $83.93 million.
- The gross profit margin for JACOBS ENGINEERING GROUP INC is rather low; currently it is at 16.70%. Regardless of JEC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, JEC's net profit margin of 3.10% compares favorably to the industry average.
- JEC has underperformed the S&P 500 Index, declining 17.50% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
Jacobs Engineering Group Inc. provides technical, professional, and construction services to various industrial, commercial, and governmental clients worldwide. The company has a P/E ratio of 13.2, equal to the average diversified services industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Jacobs Engineering Group has a market cap of $4.77 billion and is part of the
industry. Shares are down 8.9% year to date as of the close of trading on Wednesday.
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-- Written by a member of TheStreet Ratings Staff
TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.