J
Jacobs Engineering Group, Inc.
Industrial/Transportation
11/17/2020
Presented
| Date | 11/13/2020 |
| Price | $103.27 |
| Market Cap | $13.45B |
| Ent Value | $12.93B |
| P/E Ratio | 32.83x |
| Book Value | $44.83 |
| Div Yield | 0.74% |
| Shares O/S | 130.21M |
| Ave Daily Vol | 738,249 |
| Short Int | 1.77% |
Current
| Price | $138.34 |
| Market Cap | $17.19B |
| Jacobs Engineering Group, Inc. engages in the provision of a diverse range of technical, professional, and construction services to industrial, commercial, and governmental clients. Jacobs provides professional services through two lines of businesses: Critical Mission Solutions, and People and Places Solutions. Though the Critical Mission Solutions business, it provides cyber security, data analytics, software application development, enterprise and mission IT, systems integration and other technical consulting solutions to government agencies as well as selective aerospace, automotive and telecom customers. Its representative clients include national government departments/agencies in the US, Europe, United Kingdom, Australia, and Asia; state and local departments of transportation within the US; and private industry firms. The People and Places Solutions business provides end-to-end solutions for clients projects which includes connected mobility, water, smart cities, advanced manufacturing or the environment. Its clients include national, state and local government in the U.S., Europe, U.K., Middle East, Australia, New Zealand and Asia, as well as the private sector throughout the world. The company was founded by Joseph J. Jacobs in 1947 and is headquartered in Dallas, TX. |
Publicly traded companies mentioned herein: Booz Allen Hamilton Holding Corp (BAH), Jacobs Engineering Group Inc (J), Jefferies Financial Group Inc (JEF), Science Applications International Corp (SAIC), Worley Ltd (WOR AU)
Highlights
The presenter is long shares of Jacobs Engineering Group Inc (J), which was a legacy E&C company but has transformed into a pure-play government IT business. J’s ongoing multi-year transformation has resulted in many one-time complexities (e.g., deal integrations, restructurings, taxes, fees, etc.), which negatively impacted visibility. However, the presenter notes that these complexities have rolled off and investors are now left with a simpler, straightforward story of a ~$13B market cap company that will generate $700MM – $800MM of FCF annually, has <1 turn of leverage, and has a strong management team that owns >$100MM of stock. Shares currently trade at ~$102, which values the company near the low end of its 12x – 16x EBITDA peer range (e.g., BAH, SAIC, etc.), but the presenter’s base case is targeting ~30% upside and his bull case (13.5x EBITDA) calls for ~50% upside as the company continues to execute and buy back stock.
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