Gordon ReidJacobs SolutionsJDON'T BUYMay 13, 2025

They reported an excellent quarter in early February, but shares are -2% this year though up 7.7% the past year. Is a cheap stock and an acquisition they made is positive. The stock decline makes no sense.

EPS of $1.75 beat estimates of $1.67; revenue of $3.15B matched estimates. EBITDA of $323M missed estimates by 2%. We would consider the quarter to be 'decent'. Jacobs is firmly on track with its 2029 plan, building robust momentum toward a significant fiscal 2026 operating-margin gain after another solid top-line performance in fiscal 4Q. PA Consulting's revenue growth turned positive, reaching mid-single digits and driving double-digit operating-profit growth. The Life Sciences and Advanced Manufacturing and Water subsegments continue to deliver strong results. The 6.7% revenue increase and 12% Ebitda jump in 4Q highlight potential for more quarterly improvement, aided by expectations of rising activity in the US and overseas. The company revealed 2026 guidance of roughly 6-10% adjusted net revenue growth, 14.4%-14.7% adjusted Ebitda margin and adjusted EPS of $6.90-$7.30. The sell-off did seem excessive based on results/guidance. It looks like investors focused on a more-favourable tax rate in the quarter which may not be extended into future quarters. But we think things are fine here overall.
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EPS of $1.75 beat estimates of $1.67; revenue of $3.15B matched estimates. EBITDA of $323M missed estimates by 2%. We would consider the quarter to be 'decent'. Jacobs is firmly on track with its 2029 plan, building robust momentum toward a significant fiscal 2026 operating-margin gain after another solid top-line performance in fiscal 4Q. PA Consulting's revenue growth turned positive, reaching mid-single digits and driving double-digit operating-profit growth. The Life Sciences and Advanced Manufacturing and Water subsegments continue to deliver strong results. The 6.7% revenue increase and 12% Ebitda jump in 4Q highlight potential for more quarterly improvement, aided by expectations of rising activity in the US and overseas. The company revealed 2026 guidance of roughly 6-10% adjusted net revenue growth, 14.4%-14.7% adjusted Ebitda margin and adjusted EPS of $6.90-$7.30. The sell-off did seem excessive based on results/guidance. It looks like investors focused on a more-favourable tax rate in the quarter which may not be extended into future quarters. But we think things are fine here overall.
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Sold it when it did a spinoff and there were potentially damaging tax consequences for Canadian investors. Still a very good company.

In the space, he does own EME and has for a very long time. Peer group analysis is always helpful, as it helps you find #1 in an industry.

Projected 16% earnings growth in 2026, yet trades at only less than 21.5x PE 2026.

Engineering construction. Very strong foothold in the US transportation market. The multiple's moved up a lot since September, so he doesn't see much upside in the next year. Instead, he'd look at ATRL.

They're transition from making the projects to consulting on engineering. This will see higher margins. He still likes it, because infrastructure building won't stop in the U.S.

He recently sold it because they are reorganizing, splitting off their critical missions division, but he's worried about the tax treatment for Canadians--will CRA make it tax exempt? Maybe sell it to avoid a tax headache.

He's been adding to this. The 1-year chart has been upward, though a little choppy, now at highs. Has strong upside in intelligence analytics, energy transition and space exploration. Are focused in water solutions and transportation infrastructure, so they will benefit massively from the US infrastructure bill.

They help design the advanced facilities that produce the popular weight-loss drugs, which will need to scale up to meet the huge demand for these drugs. J's life sciences unit is growing at double digits.

He bought an initial position but is not going to a full position yet. The recent earnings report was not that good. It is a provider of construction and maintenance services, engineering design, etc. There are great tailwinds with the updating of infrastructure, space exploration, supply chain investments, etc. Its focus on water and transportation is good for infrastructure spending. Good to buy for the long term.
Buy 16  Hold 3  Sell 0

They serve governments in construction management in consulting, so will benefit from government infrastructure spending. It relatively safe if there's an economic downturn.