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Jacobs Is Trading at a Discount: Should You Buy or Hold the Stock?
JJacobs Solutions (J) ZACKS·2025-06-05 12:51

Core Insights - Jacobs Solutions Inc. is currently trading at a discount compared to its industry peers, with a forward 12-month price-to-earnings (P/E) ratio of 18.97X, lower than the industry average of 24.73X and the broader Business Services sector's 22.69X [1][9] - The company's stock has gained 5% in the past month, underperforming the industry and S&P 500, which increased by 15.7% and 6.3% respectively, due to rising direct costs and unfavorable currency movements [5] - Jacobs' backlog rose 20% year-over-year to 22.16billion,drivenbystrongdemandinkeymarkets,supportingitsgrowthprospects[9][10]ValuationComparison−JacobsistradingbelowsimilarplayerssuchasEMCORGroup(19.75X),AECOM(20X),andSterlingInfrastructure(21.87X)[2]−Thecompany′sdiscountedvaluationmayappealtoinvestorslookingforlong−termvalue[19]GrowthProspects−Jacobsforecastsa522.16 billion, driven by strong demand in key markets, supporting its growth prospects [9][10] Valuation Comparison - Jacobs is trading below similar players such as EMCOR Group (19.75X), AECOM (20X), and Sterling Infrastructure (21.87X) [2] - The company's discounted valuation may appeal to investors looking for long-term value [19] Growth Prospects - Jacobs forecasts a 5% to 7% year-over-year increase in net revenues for the fiscal third quarter, primarily from its current backlog [11] - The company has seen steady growth in Water and Environmental services, and double-digit revenue growth in Life Sciences and Advanced Manufacturing, supported by significant contracts [12] - Jacobs is expanding its presence in the data center infrastructure market, securing key roles in emerging technology projects [14][15] Backlog and Revenue Growth - The Infrastructure & Advanced Facilities segment's backlog increased to 21.77 billion from 18.13billionyear−over−year[10]−Theearningsestimateforfiscal2025indicatesa13.818.13 billion year-over-year [10] - The earnings estimate for fiscal 2025 indicates a 13.8% year-over-year growth, reflecting optimism among investors despite a downward revision trend [16] Market Challenges - Jacobs faces pressure from rising direct costs and currency fluctuations, which may impact margins in the near term [18] - The company experienced unfavorable foreign exchange impacts of 2.3 million in the first half of fiscal 2025, contrasting with favorable impacts of $59 million in the previous year [18]