Jacobs Engineering Group
J
$149.05
-1.93%
Jacobs Solutions Inc. is a global provider of engineering, design, procurement, construction, and maintenance services, as well as cyber engineering and security solutions, serving industrial, commercial, and government clients across sectors such as water, transportation, healthcare, technology, and chemicals. As a major player in the Engineering & Construction industry, Jacobs differentiates itself through its scale (approximately 60,000 employees and $12 billion in fiscal 2025 revenue) and its focus on high-value, technology-enabled infrastructure and consulting services. The current investor narrative centers on the company's strategic pivot toward higher-margin, technology-driven segments like PA Consulting, which is expected to drive growth and margin expansion, while the market also watches for the impact of recent quarterly volatility and the company's ability to sustain its recovery from a mid-2026 dip.…
J
Jacobs Engineering Group
$149.05
Investment Opinion: Should I buy J Today?
Based on the analysis, Jacobs Solutions earns a Buy rating. The consensus recommendation is 'Buy' with an average price target of $162.53, implying +6.94% upside. The thesis centers on the company's strong revenue growth (26.95% YoY) and undervalued PS ratio (1.48x vs. industry 2.5x), which could drive re-rating as margins recover.
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J 12-Month Price Forecast
The AI model leans bullish on Jacobs due to its strong revenue acceleration and discounted valuation. However, confidence is medium given the recent earnings volatility and negative cash flow. The key swing factor is margin recovery; if the company can post consistent profits, the stock could re-rate higher. Conversely, continued losses would undermine the bull case. The model would upgrade to high confidence if Q3 shows positive EPS and positive operating cash flow, and downgrade to neutral if revenue growth decelerates below 15%.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Jacobs Engineering Group's 12-month outlook, with a consensus price target around $162.53 and implied upside of +9.1% versus the current price.
Average Target
$162.53
0 analysts
Implied Upside
+9.1%
vs. current price
Analyst Count
—
covering this stock
Price Range
$144 - $181
Analyst target range
Jacobs Solutions has coverage from 15 analysts, with a consensus recommendation of 'Buy' and a mean recommendation score of 1.94 (where 1 is Strong Buy and 5 is Sell). The average price target is $162.53, implying an upside of +6.94% from the current price of $151.98. The distribution includes 10 Buy ratings, 4 Hold ratings, and 1 Sell rating, indicating a generally bullish sentiment but with some caution. The low target of $144.00 suggests a downside of -5.25%, while the high target of $181.00 implies an upside of +19.08%, reflecting a wide range of expectations. The high target likely assumes successful execution of the PA Consulting growth strategy and margin expansion, while the low target may price in continued operational volatility and potential project delays. Recent ratings actions have been mostly neutral to positive, with firms like RBC Capital and Citigroup maintaining Outperform and Buy ratings, while Truist Securities holds at Hold, indicating a stable but not overly enthusiastic outlook. The wide target spread (from $144 to $181) highlights uncertainty about the company's near-term earnings recovery and the success of its strategic initiatives.
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Bulls vs Bears: J Investment Factors
Jacobs Solutions presents a mixed picture: strong revenue growth and a discounted PS ratio are countered by recent losses and operational volatility. The bull case rests on the successful execution of the PA Consulting pivot and margin recovery, while the bear case highlights the risk of continued earnings instability. Currently, the evidence slightly favors the bulls given the strong revenue acceleration and analyst support, but the key tension is whether the company can translate top-line growth into sustainable profitability. If margins recover to historical levels, the stock could re-rate higher; if not, the current valuation may prove rich.
Bullish
- Strong Revenue Growth: Q2 FY2026 revenue grew 26.95% YoY to $3.69B, accelerating from the prior quarter's $3.29B. This robust top-line expansion indicates strong demand across Jacobs' infrastructure and consulting segments.
- Undervalued on Price-to-Sales: The PS ratio of 1.48x is 41% below the industry average of 2.5x and near the bottom of its historical range (2.97x-5.63x). This suggests the market is pricing in significant pessimism, offering potential upside if earnings recover.
- Analyst Consensus is Buy: With a consensus recommendation of 'Buy' (mean score 1.94) and an average price target of $162.53, analysts see +6.94% upside. The high target of $181 implies +19.08% upside, reflecting confidence in the PA Consulting strategy.
- Positive Momentum and Recovery: The stock has rebounded strongly from its May 2026 low of $107.27, gaining over 40% to $151.98. It now sits near the top of its 52-week range, indicating improving investor sentiment and technical strength.
Bearish
- Quarterly Net Loss: Q2 FY2026 posted a net loss of -$45.88M, swinging from a $133.2M profit in Q1. The negative operating margin of -2.20% and gross margin decline to 21.51% from 23.24% highlight operational instability.
- Negative Operating Cash Flow: Operating cash flow was -$484.12M in the most recent quarter, a sharp reversal from positive levels, driven by working capital swings. This raises concerns about earnings quality and liquidity management.
- Weak Profitability Metrics: Net margin of 2.41% is less than half the industry average of 5%, and ROE of 7.97% is modest. The negative EPS in Q2 and inconsistent margins suggest the company struggles to convert revenue into profits.
- High Valuation on Forward PE: The forward PE of 18.40x is in line with the sector average, but given the recent earnings miss, this implies the market expects a rapid recovery. If earnings disappoint, the stock could de-rate.
J Technical Analysis
Jacobs Solutions is currently in a strong recovery phase, with the stock trading at $151.98 as of August 28, 2026, near the upper end of its 52-week range of $105.68 to $168.44. The 1-year price change is +3.45%, but the stock has rebounded sharply from its May 2026 low, and the current price sits at approximately 90% of the 52-week range, indicating a strong upward move from the lows. This positioning suggests that momentum is building, though the stock remains below its 52-week high of $168.44, leaving room for further upside if the trend continues.
Beta
0.67
0.67x market volatility
Max Drawdown
-34.8%
Largest decline past year
52-Week Range
$106-$168
Price range past year
Annual Return
+1.9%
Cumulative gain past year
| Period | J Return | S&P 500 |
|---|---|---|
| 1m | +10.5% | +2.7% |
| 3m | +22.2% | +1.0% |
| 6m | +7.9% | +12.0% |
| 1y | +1.9% | +18.9% |
| ytd | +10.1% | +12.5% |
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J Fundamental Analysis
Jacobs Solutions reported revenue of $3.69 billion for the quarter ending March 27, 2026, representing a 26.95% year-over-year growth rate, a significant acceleration from the prior quarter's revenue of $3.29 billion (Q1 FY2026). However, the company posted a net loss of -$45.88 million in Q2 FY2026, a sharp swing from the $133.20 million net income in Q1, driven by a negative operating margin of -2.20% and a gross margin of 21.51%, which was down from 23.24% in the prior quarter. The company's profitability has been inconsistent, with net margins ranging from -1.24% in Q2 FY2026 to 6.15% in Q3 FY2025, indicating operational volatility. On the balance sheet, Jacobs has a debt-to-equity ratio of 0.74, a current ratio of 1.30, and generated $484.09 million in free cash flow over the trailing twelve months, though the most recent quarter saw negative operating cash flow of -$484.12 million, reflecting working capital swings. The company's ROE is 7.97%, and its ROA is 4.55%, suggesting moderate returns on equity and assets, but the negative quarterly net income raises concerns about earnings stability.
Quarterly Revenue
$3.7B
2026-03
Revenue YoY Growth
+27.0%
YoY Comparison
Gross Margin
21.5%
Latest Quarter
Free Cash Flow
$484092000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is J Overvalued?
Given the negative trailing twelve-month net income (EPS of $0.016, but recent quarterly losses), the price-to-sales (PS) ratio is the most appropriate valuation metric, currently at 1.48x, which is lower than the industry average of 2.5x, indicating a discount. The forward PE ratio of 18.40x suggests that the market expects earnings to recover, as the trailing PE of 61.87x is distorted by the low EPS. The PEG ratio is negative (-0.99) due to negative earnings growth, making it unreliable. Compared to the sector, Jacobs trades at a 41% discount on PS basis, which may be justified by its lower net margin of 2.41% versus the industry average of 5%, but the forward PE is in line with the sector average of 18x, implying that the market sees potential for margin improvement. Historically, the stock's PS ratio has ranged from 2.97x to 5.63x over the past few years, and the current 1.48x is near the bottom of that range, suggesting that the stock is undervalued relative to its own history, possibly due to the recent earnings miss and operational challenges.
PE
61.9x
Latest Quarter
vs. Historical
High-End
5-Year PE Range 13x~42x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
20.7x
Enterprise Value Multiple
Investment Risk Disclosure
Financially, Jacobs faces significant earnings volatility, as evidenced by the swing from a $133.2M profit in Q1 FY2026 to a -$45.88M loss in Q2. The negative operating margin of -2.20% and gross margin decline to 21.51% indicate cost pressures that could persist. With a debt-to-equity ratio of 0.74, leverage is manageable, but the negative operating cash flow of -$484M in the latest quarter raises liquidity concerns, especially if working capital needs continue to absorb cash. The company's reliance on project-based revenue also introduces variability, as seen in the wide range of net margins from -1.24% to 6.15% over recent quarters.
FAQ
The primary risks include: 1) Financial risk from earnings volatility, as seen in the Q2 FY2026 net loss of -$45.88M and negative operating cash flow of -$484M. 2) Competitive risk from larger, more diversified engineering firms that could pressure margins. 3) Macro risk from interest rate sensitivity, given the company's beta of 0.667 and exposure to infrastructure spending. 4) Company-specific risk from the integration of PA Consulting, which may not deliver expected synergies. The most severe risk is a prolonged period of unprofitability, which could lead to a de-rating and a drop toward the 52-week low of $105.68, representing a -30% downside from current levels.
The 12-month forecast for Jacobs Solutions is moderately bullish. The base case, with a 50% probability, sees the stock trading around the analyst average target of $162.53, implying +6.94% upside. The bull case, with a 30% probability, targets $181, driven by successful margin expansion and strong revenue growth. The bear case, with a 20% probability, could see the stock fall to $144 or lower if operational issues persist. The most likely scenario is the base case, assuming the company can stabilize profitability and maintain its growth trajectory.
Jacobs appears undervalued on a price-to-sales basis, with a PS ratio of 1.48x versus the industry average of 2.5x and its historical range of 2.97x-5.63x. This suggests the market is pricing in significant pessimism about future profitability. However, the forward PE of 18.40x is in line with the sector, implying that the market expects earnings to recover. If the company fails to meet those expectations, the stock could be considered overvalued. Overall, the valuation is attractive relative to history and peers, but it hinges on the company's ability to improve margins.
Jacobs Solutions presents a compelling buy opportunity for investors with a higher risk tolerance. The stock trades at a 41% discount to its industry on a PS basis (1.48x vs. 2.5x) and has a consensus Buy rating with an average price target of $162.53, implying +6.94% upside. However, the recent quarterly loss and negative operating cash flow introduce significant risk. For investors who believe the company can return to profitability, the current price offers an attractive entry point; for those seeking stability, it may be prudent to wait for evidence of margin recovery.
Jacobs Solutions is better suited for long-term investment, given its strategic pivot to higher-margin consulting and the potential for sustained growth. The stock's beta of 0.667 indicates lower volatility than the market, but recent earnings swings suggest short-term uncertainty. The company pays a modest dividend yield of 0.86%, providing some income. For long-term investors, a holding period of at least 3-5 years is recommended to allow the PA Consulting integration to bear fruit and margins to expand. Short-term traders may find opportunities in the stock's volatility, but the fundamental thesis is best realized over a longer horizon.
