The equity risk premium of 5.91% is Professor Aswath Damodaran’s latest estimate made in July. The beta estimate of 0.82 is taken from plus500 canada Yahoo Finance’s estimates. Finally, I add a small liquidity premium of 0.3%, crafting a cost of equity of 9.78% and a WACC of 8.93%.
The company is planning to spin off its Critical Mission Solutions segment in fiscal year 2024 which represents around 35% of the entire company’s revenues. The segment provides cyber, data analytics, systems, and software application integration services along with other similar services to mostly U.S.-based government agencies. For the company’s revenues (excluding CMS), I estimate a growth of 9% in FY2023 in line with the first three quarters of the fiscal year. After the year, I estimate a growth of 7%, slightly above Jacobs’ historical growth rate – the company should grow faster without the CMS segment as the remaining segments have shown a better growth performance. The growth could be even further improved through a more refined strategy.
J holds a better value than 66% of stocks at its current price. Investors who are focused on long-term growth through buy-and-hold investing will find the Valuation Rank especially relevant when allocating their assets. The transaction should create space for the separate organizations to pursue unique strategies for the separate industries and market dynamics that the current segments operate in, setting the separate companies up for better growth.
Jacobs Solutions (NYSE: J)
Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation. Jacobs Solutions issued an update on its FY 2023 earnings guidance on Tuesday, August, 8th. The company provided earnings per share guidance of $7.25-$7.45 for the period, compared to the consensus estimate of $7.35. 7 Wall Street equities research analysts have issued «buy,» «hold,» and «sell» ratings for Jacobs Solutions in the last twelve months. There are currently 2 hold ratings and 5 buy ratings for the stock.
- The company has a good cash flow conversion as the EBIT includes a good amount of amortization due to historical acquisitions.
- The company leverages debt to its advantage – currently, Jacobs has long-term debt amounting to $3.2 billion, of which a small portion of around $55 million is in the current portion and the rest in the long-term portion.
- The company was founded in 1947 and is headquartered in Dallas, Texas.
- Approximately 0.8% of the shares of the company are sold short.
- Canadian stocks rise Thursday, posting their third straight day of gains, tracking a rally on Wall Street and in crude oil prices, which received a boost after news of an attack on an oil pipeline in Nigeria.
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Instead of a becoming separately listed company through a spin-off, the segment could also be bought off – as written on Seeking Alpha, there are rumors that Veritas and Platinum Equity could bid for the segment at a valuation of around $4 billion. The CMS segment also had the worst performance in Q3/FY2023 in terms of operating profit growth. Jacobs operates through four segments – People & Places Solutions, PA Consulting, Divergent Solutions, and Critical Missions Solutions.
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As of September 30th, there was short interest totaling 974,400 shares, a decrease of 8.1% from the September 15th total of 1,060,000 shares. Based on an average trading volume of 591,900 shares, the days-to-cover ratio is currently 1.6 days. Approximately 0.8% of the shares of the company are sold short.
Beyond FY2024, I estimate Jacobs’ growth to slow down in steps throughout the years into a perpetual growth rate of 2%. The growth estimates represent a CAGR of 4.7% from FY2022 to FY2023. To further analyze the valuation and to get a grasp of an estimated fair value for the stock, I constructed a discounted cash flow model that takes the potential sale of CMS into account. In the model, I estimate the company’s financials excluding the CMS segment and add $4 billion in cash into the company’s balance sheet, in line with reported rumors of the potential valuation at sale.
Unveiling Jacobs Solutions (J)’s Value: Is It Really Priced Right? A Comprehensive Guide
MarketRank is calculated as an average of available category scores, with extra weight given to analysis and valuation. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. These companies bucked the broader market’s sell-off thanks to earnings reports and an acquisition.
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Jacobs Engineering Group Inc. provides technical, professional, and construction services. The company’s Aerospace, Technology, Environmental and Nuclear segment offers scientific, engineering, construction, nuclear, environmental, and technical support services to the aerospace, defense, technical, and automotive industries. This segment also provides services, such as manufacturing complex, expansions, modifications, and management of plant relocations; exness company review construction management and field construction services; and services to operate and maintain facilities. The company was founded in 1947 and is headquartered in Dallas, Texas. Jacobs Solutions Inc (J) receives a strong valuation score of 66 from InvestorsObserver analysis. Our proprietary scoring system considers the overall health of the company by looking at the stock’s price, earnings, and growth rate to determine if it represents a good value.
Jacobs Solutions Company Info
Major program includes advanced water purification facility, strategic funding advisement Creates drought-resilient local water supply in response to climate change DALLAS , Aug. 10, 2023 /PRNewswire/… According to 10 analysts, the average rating for J stock is «Buy.» The 12-month stock price forecast is $148.9, which is an increase of 7.56% from the latest price. Supported by world-class markets data from Dow Jones and FactSet, and partnering with Automated Insights, MarketWatch Automation brings you the latest, most pertinent content at record speed and with unparalleled accuracy. MarketBeat just released its list of 10 cheap stocks that have been overlooked by the market and may be seriously undervalued.
Jacobs Solutions declared that its board has authorized a share buyback program on Wednesday, January 25th 2023, which allows the company to buyback $1,000,000,000.00 in outstanding shares, according to EventVestor. This buyback authorization allows the company to buy up to 6.5% of its stock through open market purchases. Stock buyback programs are generally an indication that the company’s leadership believes its stock is undervalued. The company is scheduled to release its next quarterly earnings announcement on Monday, November 20th 2023. Underground project links ocean to onshore utility-grid connection and monitoring facility Supports renewable new energy technology, security and energy transition efforts DALLAS , June 6, 2023 /PRNew…