Water-Logged And Getting Wetter: Jacobs Engineering Group (JEC)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Jacobs Engineering Group ( JEC) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Jacobs Engineering Group as such a stock due to the following factors:

  • JEC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $40.4 million.
  • JEC has traded 945,325 shares today.
  • JEC traded in a range 216.6% of the normal price range with a price range of $2.10.
  • JEC traded below its daily resistance level (quality: 26 days, meaning that the stock is crossing a resistance level set by the last 26 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on JEC:

Jacobs Engineering Group Inc. provides technical, professional, and construction services to various industrial, commercial, and governmental clients worldwide. JEC has a PE ratio of 19.8. Currently there are 5 analysts that rate Jacobs Engineering Group a buy, no analysts rate it a sell, and 11 rate it a hold.

The average volume for Jacobs Engineering Group has been 762,700 shares per day over the past 30 days. Jacobs Engineering Group has a market cap of $8.4 billion and is part of the services sector and diversified services industry. The stock has a beta of 1.87 and a short float of 1.4% with 2.60 days to cover. Shares are up 49.8% year to date as of the close of trading on Monday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Jacobs Engineering Group as a buy. 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, solid stock price performance, growth in earnings per share and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 0.3%. Since the same quarter one year prior, revenues rose by 11.1%. 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 0.11 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 2.08, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 63.57% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, JEC should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • JACOBS ENGINEERING GROUP INC has improved earnings per share by 9.2% 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 ($3.26 versus $2.94).
  • Net operating cash flow has significantly increased by 838.62% to $184.53 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 22.80%.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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