Critical Survey: Jacobs Engineering Group (NYSE:JEC) and Sterling Construction (STRL)
Jacobs Engineering Group (NYSE: JEC) and Sterling Construction (NASDAQ:STRL) are both construction companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, profitabiliy, institutional ownership, earnings, risk, dividends and analyst recommendations.
Institutional and Insider Ownership
86.9% of Jacobs Engineering Group shares are held by institutional investors. Comparatively, 73.2% of Sterling Construction shares are held by institutional investors. 1.5% of Jacobs Engineering Group shares are held by insiders. Comparatively, 5.2% of Sterling Construction shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
This is a summary of current ratings and price targets for Jacobs Engineering Group and Sterling Construction, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Jacobs Engineering Group||0||6||2||0||2.25|
Jacobs Engineering Group presently has a consensus price target of $61.00, suggesting a potential upside of 14.96%. Sterling Construction has a consensus price target of $13.50, suggesting a potential upside of 2.43%. Given Jacobs Engineering Group’s higher probable upside, equities analysts plainly believe Jacobs Engineering Group is more favorable than Sterling Construction.
This table compares Jacobs Engineering Group and Sterling Construction’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Jacobs Engineering Group||2.05%||8.56%||5.06%|
Earnings and Valuation
This table compares Jacobs Engineering Group and Sterling Construction’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Jacobs Engineering Group||$10.19 billion||0.63||$630.50 million||$1.72||30.85|
|Sterling Construction||$716.97 million||0.50||$16.74 million||($0.15)||-87.86|
Jacobs Engineering Group has higher revenue and earnings than Sterling Construction. Sterling Construction is trading at a lower price-to-earnings ratio than Jacobs Engineering Group, indicating that it is currently the more affordable of the two stocks.
Jacobs Engineering Group pays an annual dividend of $0.60 per share and has a dividend yield of 1.1%. Sterling Construction does not pay a dividend. Jacobs Engineering Group pays out 34.9% of its earnings in the form of a dividend.
Volatility & Risk
Jacobs Engineering Group has a beta of 1.53, meaning that its stock price is 53% more volatile than the S&P 500. Comparatively, Sterling Construction has a beta of 0.36, meaning that its stock price is 64% less volatile than the S&P 500.
Jacobs Engineering Group beats Sterling Construction on 11 of the 14 factors compared between the two stocks.
About Jacobs Engineering Group
Jacobs Engineering Group Inc. is a technical professional services company. The Company provides a range of technical, professional and construction services to industrial, commercial and governmental clients. The Company’s services include Project Services; Process, Scientific, and Systems Consulting Services; Construction Services, and Operations and Maintenance Services. It operates four lines of business (LOBs): Petroleum and Chemicals; Buildings and Infrastructure; Aerospace and Technology, and Industrial. It caters its services to various sectors, such as oil and gas exploration, production and refining; chemicals and polymers; programs for various national governments, including aerospace, defense, and environmental programs; buildings; infrastructure and telecommunications; mining and minerals; pharmaceuticals and biotechnology; power; pulp and paper; technology and manufacturing, and food and consumer products.
About Sterling Construction
Sterling Construction Company, Inc. is a heavy civil construction company engaged in the building and reconstruction of transportation and water infrastructure projects in Texas, Utah, Nevada, Arizona, California, Hawaii and other states. The Company’s transportation infrastructure projects include highways, roads, bridges, airfields, ports and light rail. Its water infrastructure projects include water, wastewater and storm drainage systems. The Company operates through heavy civil construction segment. The Company provides its services by using traditional general contracting arrangements, such as lump sum contracts and cost-plus contracts. The Company serves various markets in the United States, including Texas, Utah, Nevada, Arizona, California and Hawaii. The Company’s customers include departments of transportation in various states (DOTs), regional transit authorities, airport authorities, port authorities, water authorities and railroads.
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