Jacobs Solutions Stock: Is J Underperforming the Industrial Sector?

Jacobs Solutions Inc. (J), headquartered in Dallas, Texas, is a leading technical professional services provider. With a market cap of $15.3 billion, the company offers engineering and construction services, as well as scientific and specialty consulting for a broad range of clients including companies, organizations, and government agencies. 

Companies worth $10 billion or more are generally described as “large-cap stocks,” and Jacobs Solutions perfectly fits that description, with its market cap exceeding this mark, underscoring its size, influence, and dominance within the engineering & construction industry. Jacobs Solutions' market leadership stems from its comprehensive service offerings, robust brand, and diversified sector expertise, spanning water, transportation, healthcare, technology, and chemicals. 

Despite its notable strength, J shares slipped 15.4% from their 52-week high of $150.54, achieved on Nov. 13, 2024. Over the past three months, J stock has gained 4%, underperforming the Industrial Select Sector SPDR Fund’s (XLI) 7.8% gains during the same time frame.

In the longer term, shares of J dipped 4.7% on a YTD basis but climbed 8.4% over the past 52 weeks, underperforming XLI’s YTD gains of 7.9% and 15.5% returns over the last year.

To confirm the bearish trend, J has been trading below its 200-day moving average since late February. However, the stock is trading above its 50-day moving average since late April, with slight fluctuations.

J’s underperformance is due to a mark-to-market loss on their investment in Amentum, resulting in lower earnings. 

On May 6, J shares closed down more than 6% after reporting its Q2 results. Its adjusted EPS of $1.43 topped Wall Street expectations of $1.41. The company’s adjusted revenue stood at $2.1 billion, up 3.1% year over year. J expects full-year adjusted EPS in the range of $5.85 to $6.20.

In the competitive arena of engineering & construction, TopBuild Corp. (BLD) has taken the lead over J, showing resilience with 4.3% loss on a YTD basis. However, BLD shares lagged behind the stock with a 27.6% downtick over the past 52 weeks.

Wall Street analysts are moderately bullish on J’s prospects. The stock has a consensus “Moderate Buy” rating from the 15 analysts covering it, and the mean price target of $144.04 suggests a potential upside of 13.1% from current price levels.