Jacobs Gears Up to Report Q4 Earnings: Things to Keep in Mind

Jacobs Solutions, Inc. J is slated to report fourth-quarter fiscal 2024 results on Nov. 19, before market open.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.In the last reported quarter, the company’s earnings topped the Zacks Consensus Estimate by 0.5%, and revenues missed the same by 3.5%. On a year-over-year basis, its adjusted earnings grew 11.4% and revenues inched up 1.1%.The leading provider of professional, technical and construction services’ earnings topped the consensus mark in three of the last four quarters and missed on one occasion, with the average being 8.3%.Jacobs Solutions Inc. Price and EPS Surprise Jacobs Solutions Inc. price-eps-surprise | Jacobs Solutions Inc. QuoteTrend in EstimatesFor the quarter to be reported, the Zacks Consensus Estimate for earnings per share (EPS) increased to $2.08 from $2.07 in the past 60 days. The estimated figure indicates a 9.5% increase from the $1.90 reported in the year-ago quarter.Factors to Note for Jacobs' Q4Jacobs’ revenues are expected to have increased in the fourth quarter of fiscal 2024, thanks to investments from the U.S. Infrastructure Act and other economic incentives. The company's strategic move away from being solely an engineering and construction firm toward a globally-focused technology solutions provider is likely to have been reflected in the upcoming financial report.Additionally, this quarter is anticipated to have demonstrated the positive effects of a backlog with higher margins, a dedication to efficiency through digital and technological advancements, and solid project execution, all playing roles in driving overall growth.J’s continuous shift to digitalization and leadership in strategic end markets like space exploration, life sciences, cyber and water solutions bode well. Again, the U.S. Department of Defense’s increased focus on strategic data utilization is likely to have driven Jacobs’ growth.However, some short-term headwinds, such as government funding delays, are expected to impact the top line.A favorable revenue mix in both People & Places Solutions (P&PS) and Critical Mission Solutions (CMS) segments and benefits from PA Consulting (which has a solid accretive gross margin profile of nearly 50%) are likely to get reflected in margins. However, higher overhead costs to facilitate the separation of CMS might have dented margins.Segment-wise, Jacobs expects continued organic growth in the P&PS segment (which accounted for 58.4% of total revenues in fiscal 2023), primarily driven by a strong backlog in water infrastructure, environmental projects, and advanced facilities like life sciences and semiconductor facilities.The Zacks Consensus Estimate for P&PS segment revenues is currently pegged at $2.68 billion, reflecting growth from $2.51 billion year over year. P&PS’s operating profit is expected to grow to $286 million from the year-ago figure of $256 million.The CMS segment (which accounted for 28.7% of total fiscal 2023 revenues) has been a pivotal component of the company's operations, delivering specialized services to government and defense sectors. In May 2023, Jacobs announced plans to separate the CMS business to streamline its portfolio and enhance its focus on higher-growth areas.On Nov. 20, 2023, Jacobs entered into a definitive agreement to spin off and merge its CMS and Cyber & Intelligence (C&I) businesses with Amentum, a global engineering and technology solutions provider. The merger was completed on Sept. 27, 2024, resulting in the formation of a global leader in advanced engineering and technology solutions. The combined company began trading on the New York Stock Exchange under the ticker "AMTM" on Sept. 30, 2024.The consensus mark for the CMS segment’s revenues is currently pegged at $1.243 billion, indicating a marginal growth from $1.236 billion a year ago. The CMS segment’s operating profit is expected to be $109 million, up from $103 million reported a year ago.For the Divergent Solutions segment (which accounted for 5.8% of total fiscal 2023 revenues) continues to play a crucial role in Jacobs' strategy to deliver innovative, data-driven solutions across its global operations. The segment’s operating profit is expected to be $15 million, down from $24.15 million reported in the prior quarter.The consensus mark for the PA Consulting segment’s (which accounted for 7.1% of total fiscal 2023 revenues) revenues is currently pegged at $303 million, up from $288 million a year ago. The segment’s operating profit is expected to be $64 million, up from $59 million year over year.Jacobs anticipates temporarily increased overhead costs necessary to facilitate the separation of CMS, encompassing IT and corporate support. While streamlining its corporate cost structure, it has opted to transfer certain corporate unallocated costs to the P&PS segment. This move aims to enhance the long-term recuperation of its corporate overhead. Although this adjustment may temporarily lower segment operating margins, it does not affect the bottom line.What the Zacks Model Says for JacobsOur proven model does not conclusively predict an earnings beat for Jacobs this time around. A combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. Unfortunately, this is not the case here.Earnings ESP: The company has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.Zacks Rank: Jacobs currently carries a Zacks Rank #4 (Sell).You can see the complete list of today’s Zacks #1 Rank stocks here.Recent Construction ReleasesFluor Corporation’s FLR third-quarter 2024 earnings missed the Zacks Consensus Estimate and declined from the prior year with lower-than-expected contributions from the Energy Solutions segment. Revenues also missed the consensus mark but increased from the previous year.FLR noted that since the beginning of October, its ownership of NuScale no longer meets the qualifications for consolidation by Fluor. As a result, it will deconsolidate NuScale in the fourth quarter and recognize a gain of $1.6 billion for its 126 million shares. Also, it expects to complete the sale of Stork’s U.K. operations by the first quarter of 2025, pending regulatory approval.KBR, Inc. KBR reported mixed third-quarter fiscal 2024 results, with adjusted earnings surpassing the Zacks Consensus Estimate and revenues missing the same. The top and bottom lines increased on a year-over-year basis.The quarter’s results were backed by the benefits realized from the LinQuest acquisition and solid contributions from both the reportable businesses, given the increased demand trends for its services. Although high costs and expenses were headwinds, leverage from the increased top line aided the uptick.Quanta Services Inc. PWR reported mixed results for the third quarter of 2024, wherein adjusted earnings beat the Zacks Consensus Estimate, but revenues missed the same.Quanta reported a strong quarter with double-digit growth across key financial metrics, a record backlog of $34 billion and $539.5 million in free cash flow. CEO Duke Austin attributed this growth to Quanta’s diverse portfolio, high demand, effective execution and an expanding market.Free: 5 Stocks to Buy As Infrastructure Spending SoarsTrillions of dollars in Federal funds have been earmarked to repair and upgrade America’s infrastructure. In addition to roads and bridges, this flood of cash will pour into AI data centers, renewable energy sources and more.In, you’ll discover 5 surprising stocks positioned to profit the most from the spending spree that’s just getting started in this space.Download How to Profit from the Trillion-Dollar Infrastructure Boom absolutely free today.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Quanta Services, Inc. (PWR): Free Stock Analysis Report Fluor Corporation (FLR): Free Stock Analysis Report KBR, Inc. (KBR): Free Stock Analysis Report Jacobs Solutions Inc. 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