Last Update 3/10/25
Jacobs Solutions Inc. (NYSE: J) is a well-established player in the engineering and consulting space, working on major infrastructure, environmental, and technology-driven projects. The company provides design, construction management, and consulting services across multiple industries, including water, transportation, and aerospace. With a strong focus on sustainability and modernization, Jacobs is positioned to benefit from ongoing investments in infrastructure and technological advancements.
While it isn’t a high-yield dividend stock, Jacobs offers consistent payouts backed by solid earnings and cash flow. For investors seeking stability with the potential for long-term dividend growth, it’s worth a closer look.
📊 Key Dividend Metrics
💰 Dividend Yield: 1.03%
📈 5-Year Average Dividend Yield: 0.75%
💸 Annual Dividend Payout: $1.28 per share (forward)
📅 Ex-Dividend Date: February 21, 2025
📆 Next Dividend Payment: March 21, 2025
📊 Payout Ratio: 31.69%
📉 Dividend Growth Rate (5-Year Avg): Moderate growth
🔒 Dividend Safety: Strong, well-supported by earnings and cash flow
Dividend Overview
Jacobs isn’t known for high-yield dividends, but that doesn’t mean it should be overlooked. With a current dividend yield just above 1%, it’s not a stock for income-focused investors looking for high payouts. However, for those who value a combination of stability and future growth, Jacobs’ dividend track record is appealing.
The company has consistently rewarded shareholders with dividend increases, demonstrating a commitment to sustainable payouts. The relatively low payout ratio of 31.69% suggests Jacobs has room to keep increasing dividends while still investing in its business. Investors looking for a mix of dividend income and capital appreciation may find Jacobs to be an attractive option.
Dividend Growth and Safety
One of the strongest aspects of Jacobs’ dividend is its reliability. A payout ratio well below 40% is a good sign, indicating that dividends are comfortably covered by earnings. The company has a steady history of dividend growth, though it isn’t among the most aggressive dividend growers.
Beyond earnings, Jacobs generates strong cash flow, which is key for sustaining dividends. With $1.13 billion in free cash flow, the company has plenty of financial flexibility. Even if economic conditions were to weaken, the dividend would remain secure thanks to Jacobs’ consistent revenue and manageable expenses.
Chart Analysis
Price Action
Jacobs Solutions (J) has been in a corrective phase after reaching highs near $150 late last year. The stock has pulled back significantly, dropping below both its 50-day moving average and testing the 200-day moving average as potential support. The recent close at $124.53 suggests some stabilization, but the price remains under pressure.
The last few trading sessions have seen some recovery attempts, but overall, the downward trend remains intact. The price has struggled to reclaim the 50-day moving average, which is now acting as resistance. If the stock fails to break above this level, it could indicate continued weakness.
Moving Averages
The 50-day moving average is sloping downward, which suggests short-term bearish momentum. This means that even if the stock sees brief rallies, it could struggle to maintain upward momentum unless buyers step in with conviction.
On the other hand, the 200-day moving average has been rising steadily, which typically indicates a longer-term uptrend. However, the stock is now hovering around this key level. If it breaks below decisively, it could confirm a shift to a more prolonged downtrend. A bounce off this level would signal that long-term buyers are still present.
Volume and Market Participation
Volume levels have been fluctuating, with some notable spikes on red days, indicating heavier selling pressure. However, more recent sessions have seen a mix of buying and selling, suggesting some indecision among traders.
If we see a strong green volume bar accompanied by a move back above the 50-day moving average, that could signal renewed buying interest. But if selling volume increases, especially if the price breaks below the 200-day moving average, it could indicate another leg lower.
Relative Strength Index (RSI)
The RSI has been in a clear downtrend for months, reflecting persistent weakness in momentum. It dipped close to oversold levels but has recently attempted a slight recovery. This suggests that selling pressure may be slowing down, but there isn’t a strong confirmation of a reversal yet.
For a true shift in momentum, the RSI would need to climb back toward the 50 level and hold. If it continues to hover in lower ranges, it indicates that any rallies could be short-lived.
Recent Candlestick Behavior
The last five candlesticks paint an interesting picture. There have been some long lower wicks, indicating that buyers are stepping in at lower levels, but at the same time, the upside has been limited. This type of price action often signals a battle between buyers and sellers, with no clear winner just yet.
If the next few sessions see a decisive close above $128-$130, it would suggest that buyers are regaining control. On the flip side, a drop below $122 could trigger further downside, as stop losses get triggered and sellers take advantage of weakness.
Chart Analysis
Price Action
Jacobs Solutions (J) has been in a corrective phase after reaching highs near $150 late last year. The stock has pulled back significantly, dropping below both its 50-day moving average and testing the 200-day moving average as potential support. The recent close at $124.53 suggests some stabilization, but the price remains under pressure.
The last few trading sessions have seen some recovery attempts, but overall, the downward trend remains intact. The price has struggled to reclaim the 50-day moving average, which is now acting as resistance. If the stock fails to break above this level, it could indicate continued weakness.
Moving Averages
The 50-day moving average is sloping downward, which suggests short-term bearish momentum. This means that even if the stock sees brief rallies, it could struggle to maintain upward momentum unless buyers step in with conviction.
On the other hand, the 200-day moving average has been rising steadily, which typically indicates a longer-term uptrend. However, the stock is now hovering around this key level. If it breaks below decisively, it could confirm a shift to a more prolonged downtrend. A bounce off this level would signal that long-term buyers are still present.
Volume and Market Participation
Volume levels have been fluctuating, with some notable spikes on red days, indicating heavier selling pressure. However, more recent sessions have seen a mix of buying and selling, suggesting some indecision among traders.
If we see a strong green volume bar accompanied by a move back above the 50-day moving average, that could signal renewed buying interest. But if selling volume increases, especially if the price breaks below the 200-day moving average, it could indicate another leg lower.
Relative Strength Index (RSI)
The RSI has been in a clear downtrend for months, reflecting persistent weakness in momentum. It dipped close to oversold levels but has recently attempted a slight recovery. This suggests that selling pressure may be slowing down, but there isn’t a strong confirmation of a reversal yet.
For a true shift in momentum, the RSI would need to climb back toward the 50 level and hold. If it continues to hover in lower ranges, it indicates that any rallies could be short-lived.
Recent Candlestick Behavior
The last five candlesticks paint an interesting picture. There have been some long lower wicks, indicating that buyers are stepping in at lower levels, but at the same time, the upside has been limited. This type of price action often signals a battle between buyers and sellers, with no clear winner just yet.
If the next few sessions see a decisive close above $128-$130, it would suggest that buyers are regaining control. On the flip side, a drop below $122 could trigger further downside, as stop losses get triggered and sellers take advantage of weakness.
Analyst Ratings
📊 Jacobs Solutions Inc. (NYSE: J) has recently seen mixed reactions from analysts, with both upgrades and downgrades shaping market sentiment. The stock currently holds a moderate buy consensus, with an average price target of $155.33, suggesting a potential upside of approximately 11.09% from its latest closing price.
🔼 Upgrades
- Raymond James 🟢 Upgraded from Market Perform to Outperform on October 4, 2024, with a price target of $160. The firm cited strong financial performance and growth opportunities in infrastructure and engineering projects as key reasons for the upgrade.
- Citigroup 🟢 Maintained a Strong Buy rating while raising its price target from $139 to $166 on October 22, 2024. Analysts pointed to Jacobs’ strategic expansion in high-growth sectors and its ability to leverage new business opportunities as reasons for the price target increase.
🔽 Downgrades
- Benchmark 🔴 Downgraded from Buy to Hold on November 20, 2024, due to concerns over potential headwinds in the company’s advanced manufacturing sector. While no specific price target was given, analysts expressed caution about near-term earnings volatility.
- RBC Capital 🔴 Maintained an Outperform rating but lowered its price target from $167 to $152 on November 21, 2024. The adjustment was driven by concerns over macroeconomic uncertainties and their impact on Jacobs’ valuation and earnings outlook.
📉 These mixed ratings highlight the balance between Jacobs’ long-term growth potential and short-term risks, with analysts split on whether the stock’s valuation fully reflects its opportunities and challenges.
Earnings Report Summary
Jacobs Solutions Inc. recently reported its first-quarter earnings for 2025, showing a mix of strong revenue growth and some unexpected challenges. The company brought in $2.9 billion in revenue, marking a 4.4% increase compared to the same period last year. A big part of this growth came from its Infrastructure and Advanced Facilities segment, which saw a solid 4.9% boost.
However, despite the revenue increase, Jacobs posted a net loss of $17.1 million for the quarter. This was largely due to a $145 million mark-to-market loss on its investment in Amentum, which put pressure on the bottom line. As a result, earnings per share (EPS) came in at negative $0.10, a sharp decline compared to last year.
On the bright side, the company’s adjusted EBITDA jumped 23.6% year-over-year to $282 million, signaling strong operational efficiency. Adjusted EPS landed at $1.33, which was slightly lower than last year due to some unfavorable tax comparisons.
Looking ahead, Jacobs’ backlog of projects grew to $21.8 billion, up nearly 19% from last year. The book-to-bill ratio stood at 1.0x for the quarter and 1.3x over the past year, which means the company has a steady flow of future business lined up.
Jacobs also continued rewarding its shareholders, buying back $202 million worth of shares during the quarter. On top of that, the company announced a new $1.5 billion share repurchase program, the biggest in its history. Investors also got some good news on dividends, with the company raising its quarterly payout to $0.32 per share, marking a 10% increase year-over-year.
With these results, Jacobs raised its adjusted EPS guidance for 2025, signaling confidence in its strategy and market positioning. While there were some short-term financial headwinds, the company appears to be setting itself up for long-term stability and growth.
Financial Health and Stability
Jacobs maintains a strong financial position, which is essential for both stability and dividend security.
- Revenue (TTM): $11.62 billion, up 4.4% year-over-year
- Net Income: $459.86 million
- Operating Margin: 7.77%, showing strong operational efficiency
- Return on Equity (ROE): 8.17%, a steady performance for shareholders
- Total Debt: $3.03 billion, with a debt-to-equity ratio of 60.42%
- Cash on Hand: $1.9 billion, providing a cushion for operations and dividends
The company carries a moderate level of debt, but nothing that raises red flags. The cash position remains strong, and the current ratio of 1.25 suggests Jacobs is maintaining a balanced approach between liquidity and reinvestment. For dividend investors, the ability to generate consistent cash flow is more important than having a high yield, and Jacobs delivers on this front.
Valuation and Stock Performance
At a price of $123.58, Jacobs is trading at a forward P/E ratio of 20.45, which is reasonable for a company in the infrastructure and consulting sector. The PEG ratio of 1.33 suggests the stock is fairly valued based on expected growth.
Other valuation factors include:
- Price/Sales Ratio: 1.34, slightly higher than some peers but justified by strong margins
- Price/Book Ratio: 3.63, reflecting solid asset value and investor confidence
- EV/EBITDA: 13.90, showing the company is not overly expensive compared to earnings
The stock has fluctuated between $111.23 and $150.54 over the past year, meaning it has some volatility but remains within a stable range. Currently, it’s trading below its 50-day moving average of $133.08, which might suggest a near-term pullback. However, with a five-year beta of 0.77, Jacobs is less volatile than the broader market, making it a lower-risk option for conservative investors.
Risks and Considerations
No stock is without risks, and Jacobs is no exception. Here are a few key factors investors should be aware of:
⚠️ Economic Sensitivity: Jacobs relies on infrastructure and capital expenditure projects, many of which are tied to government and corporate budgets. Any slowdown in spending could impact revenue.
⚠️ Debt Levels: While debt is manageable, $3.03 billion in total liabilities is something to keep an eye on, especially if interest rates remain high.
⚠️ Low Dividend Yield: With a yield just over 1%, Jacobs is not ideal for income-seeking investors who prioritize high dividends. The total return potential is stronger than the income alone.
⚠️ Stock Valuation: While not overpriced, Jacobs is not a bargain either. Investors looking for an entry point may prefer waiting for a pullback closer to the $115-$120 range.
Final Thoughts
Jacobs Solutions Inc. offers a compelling mix of dividend reliability and long-term growth potential. While it doesn’t provide high yields, its strong financial health, growing free cash flow, and commitment to increasing dividends make it a worthy choice for investors focused on stability.
The company benefits from its positioning in infrastructure and technology-driven solutions, both of which are expected to see steady demand. Its balance sheet remains solid, and with a low payout ratio, future dividend growth is likely.
For those who want consistent dividend income with lower volatility and capital appreciation over time, Jacobs is a solid option. It may not be the best choice for high-yield seekers, but for those who appreciate steady, well-supported dividends, it offers a strong foundation.
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