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Will Q2 Earnings Hold a Surprise for Jacobs (JEC) Stock?

Premium technical services company Jacobs Engineering Group Inc. JEC is scheduled to report second-quarter fiscal 2016 results before the opening bell on May 5.

For the last four quarters, the company generated a positive average earnings surprise of 10.13%.

Jacobs aims to improve its revenues and margins on the back of a unique customer-centric model.

Let’s see how things are shaping up prior to this announcement.

Factors to Influence Second-Quarter Results

Jacobs expects to report higher revenues in the to-be-reported quarter on the back of its diversified product portfolio and increased demand from Aerospace & Technology as well as PharmaBio markets. Moreover, the company anticipates its new business contracts to help in boosting sales in the quarter under review. At the same time, timely project delivery, specialized cost reduction plans along with lower overhead as well as real estate portfolio expenses are expected to widen margin in the fiscal second quarter.

However, reduced capital spending by major integrated oil and mining companies, unfavorable product pricing environment and strong U.S. dollar might weigh on the company’s revenues and earnings in the to-be-reported quarter.  

Earnings Whispers

Our proven model does not conclusively state that Jacobs’ is likely to beat earnings in the quarter under review. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for an earnings beat. That is not the case here as we will see below.

Zacks ESP: Jacobs’ has an Earnings ESP of -17.39%, as the Most Accurate estimate of 57 cents stands below with the Zacks Consensus Estimate of 69 cents.

Zacks Rank: Jacobs has a Zacks Rank #3 (Hold). However, a negative Earnings ESP makes surprise prediction difficult.  

Note that we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

Here are some companies you may want to consider instead, as our model shows these stocks have the right combination of elements to post an earnings beat this quarter:

PRGX Global, Inc. PRGX with an Earnings ESP of +40.00% and a Zacks Rank #1.  

Total System Services, Inc. TSS with an Earnings ESP of +1.54% and a Zacks Rank #1.

On Assignment Inc. ASGN with an Earnings ESP of +1.30% and a Zacks Rank #2.

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PRGX GLOBAL INC (PRGX): Free Stock Analysis Report
 
JACOBS ENGIN GR (JEC): Free Stock Analysis Report
 
ON ASSIGNMENT (ASGN): Free Stock Analysis Report
 
TOTAL SYS SVC (TSS): Free Stock Analysis Report
 
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