Jacobs Engineering Group Inc (NYSE:JEC) — This engineering, construction and maintenance company provides services to private industry and the federal government’s agencies on a global basis. JEC is on a Sept. 30 fiscal year system and reported $1.73 in September 2016, down from $2.40 in 2015. However, FY 2017 earnings are expected to jump to $3.30 according to Standard & Poor’s estimate, and could be revised again since this estimate was made prior to the recent presidential election.
After the election, S&P raised their price target to $70 from $60. They note that there is an expectation of an improving environment for construction and engineering in calendar year 2017. And they believe that recent restructuring due to an increase in government’s infrastructure spending and spending in industrial markets could lead to higher-than-estimated revenues and earnings.
JEC spent the first six months of this year building a base that, in July, began forming a consolidation. That consolidation, in the form of a descending (bullish) right triangle, jumped from the triangle with a break-away gap, preceded by my internal indicator, the CBR Buy. The breakout was accompanied by very high volume and evolved into a series of three step-up flags with a high at over $63. This very bullish development confirms S&P’s target of $70, but from technical rather than fundamental analysis.
Thus buy JED at $61 or lower with a price target of $70 and a proposed return of over 14%. JEC appears appropriate for traders and investors alike, especially due to the new administration’s pledge to devote capital to the nation’s infrastructure.
