Water-Logged And Getting Wetter Stock Of The Day: 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.

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 $44.9 million.
  • JEC has traded 735,731 shares today.
  • JEC traded in a range 203.6% of the normal price range with a price range of $1.38.
  • JEC traded below its daily resistance level (quality: 142 days, meaning that the stock is crossing a resistance level set by the last 142 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. JEC has a PE ratio of 17. Currently there are 8 analysts that rate Jacobs Engineering Group a buy, 1 analyst rates it a sell, and 8 rate it a hold.

The average volume for Jacobs Engineering Group has been 1.1 million shares per day over the past 30 days. Jacobs Engineering Group has a market cap of $5.3 billion and is part of the services sector and diversified services industry. The stock has a beta of 1.82 and a short float of 3.6% with 4.22 days to cover. Shares are down 5.5% year-to-date as of the close of trading on Friday.

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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 largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and growth in earnings per share. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • JEC's debt-to-equity ratio is very low at 0.17 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 1.58, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has significantly increased by 73.39% to -$34.79 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 58.86%.
  • JACOBS ENGINEERING GROUP INC's earnings per share improvement from the most recent quarter was slightly positive. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, JACOBS ENGINEERING GROUP INC reported lower earnings of $2.48 versus $3.23 in the prior year. This year, the market expects an improvement in earnings ($3.01 versus $2.48).
  • JEC, with its decline in revenue, slightly underperformed the industry average of 3.8%. Since the same quarter one year prior, revenues slightly dropped by 8.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The gross profit margin for JACOBS ENGINEERING GROUP INC is rather low; currently it is at 18.21%. 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 2.82% compares favorably to the industry average.

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