Intrinsic value of Jacobs Engineering Group Inc. - JEC

Previous Close

$82.31

  Intrinsic Value

$488.24

stock screener

  Rating & Target

str. buy

+493%

Previous close

$82.31

 
Intrinsic value

$488.24

 
Up/down potential

+493%

 
Rating

str. buy

We calculate the intrinsic value of JEC stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 11.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  23,976
  37,043
  55,398
  80,379
  113,404
  155,904
  209,268
  274,783
  353,578
  446,598
  554,574
  678,019
  817,241
  972,356
  1,143,318
  1,329,953
  1,531,995
  1,749,116
  1,980,965
  2,227,192
  2,487,478
  2,761,550
  3,049,199
  3,350,296
  3,664,793
  3,992,735
  4,334,257
  4,689,590
  5,059,055
  5,443,067
Variable operating expenses, $m
  22,407
  34,326
  51,069
  73,857
  103,980
  142,748
  191,425
  251,186
  323,061
  407,911
  505,866
  618,470
  745,464
  886,955
  1,042,901
  1,213,145
  1,397,441
  1,595,492
  1,806,978
  2,031,580
  2,269,005
  2,519,005
  2,781,391
  3,056,042
  3,342,918
  3,642,057
  3,953,583
  4,277,707
  4,614,723
  4,965,007
Fixed operating expenses, $m
  131
  134
  137
  140
  143
  146
  149
  152
  156
  159
  163
  166
  170
  174
  177
  181
  185
  189
  194
  198
  202
  207
  211
  216
  221
  225
  230
  235
  241
  246
Total operating expenses, $m
  22,538
  34,460
  51,206
  73,997
  104,123
  142,894
  191,574
  251,338
  323,217
  408,070
  506,029
  618,636
  745,634
  887,129
  1,043,078
  1,213,326
  1,397,626
  1,595,681
  1,807,172
  2,031,778
  2,269,207
  2,519,212
  2,781,602
  3,056,258
  3,343,139
  3,642,282
  3,953,813
  4,277,942
  4,614,964
  4,965,253
Operating income, $m
  1,438
  2,583
  4,192
  6,383
  9,281
  13,010
  17,694
  23,445
  30,362
  38,528
  48,545
  59,384
  71,608
  85,228
  100,239
  116,627
  134,369
  153,434
  173,793
  195,415
  218,271
  242,338
  267,597
  294,038
  321,655
  350,453
  380,444
  411,647
  444,092
  477,814
EBITDA, $m
  2,144
  3,381
  5,120
  7,488
  10,618
  14,648
  19,709
  25,923
  33,396
  42,220
  52,463
  64,173
  77,381
  92,096
  108,315
  126,022
  145,190
  165,789
  187,786
  211,147
  235,842
  261,845
  289,136
  317,704
  347,543
  378,657
  411,060
  444,774
  479,828
  516,263
Interest expense (income), $m
  13
  137
  398
  777
  1,309
  2,034
  2,992
  4,224
  5,772
  7,672
  9,957
  12,655
  15,787
  19,367
  23,405
  27,904
  32,862
  38,275
  44,135
  50,432
  57,156
  64,297
  71,846
  79,795
  88,137
  96,870
  105,991
  115,502
  125,407
  135,713
  146,428
Earnings before tax, $m
  1,301
  2,185
  3,415
  5,074
  7,247
  10,018
  13,470
  17,673
  22,690
  28,571
  35,890
  43,597
  52,241
  61,823
  72,336
  83,765
  96,094
  109,300
  123,361
  138,259
  153,974
  170,492
  187,803
  205,901
  224,785
  244,462
  264,942
  286,240
  308,379
  331,386
Tax expense, $m
  351
  590
  922
  1,370
  1,957
  2,705
  3,637
  4,772
  6,126
  7,714
  9,690
  11,771
  14,105
  16,692
  19,531
  22,617
  25,945
  29,511
  33,308
  37,330
  41,573
  46,033
  50,707
  55,593
  60,692
  66,005
  71,534
  77,285
  83,262
  89,474
Net income, $m
  949
  1,595
  2,493
  3,704
  5,290
  7,313
  9,833
  12,901
  16,564
  20,857
  26,200
  31,826
  38,136
  45,131
  52,805
  61,149
  70,148
  79,789
  90,054
  100,929
  112,401
  124,459
  137,096
  150,307
  164,093
  178,457
  193,407
  208,955
  225,117
  241,912

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  20,233
  31,260
  46,749
  67,831
  95,699
  131,564
  176,598
  231,884
  298,378
  376,876
  467,995
  572,168
  689,655
  820,554
  964,825
  1,122,324
  1,292,823
  1,476,047
  1,671,700
  1,879,487
  2,099,138
  2,330,422
  2,573,164
  2,827,254
  3,092,653
  3,369,397
  3,657,601
  3,957,460
  4,269,245
  4,593,305
Adjusted assets (=assets-cash), $m
  20,233
  31,260
  46,749
  67,831
  95,699
  131,564
  176,598
  231,884
  298,378
  376,876
  467,995
  572,168
  689,655
  820,554
  964,825
  1,122,324
  1,292,823
  1,476,047
  1,671,700
  1,879,487
  2,099,138
  2,330,422
  2,573,164
  2,827,254
  3,092,653
  3,369,397
  3,657,601
  3,957,460
  4,269,245
  4,593,305
Revenue / Adjusted assets
  1.185
  1.185
  1.185
  1.185
  1.185
  1.185
  1.185
  1.185
  1.185
  1.185
  1.185
  1.185
  1.185
  1.185
  1.185
  1.185
  1.185
  1.185
  1.185
  1.185
  1.185
  1.185
  1.185
  1.185
  1.185
  1.185
  1.185
  1.185
  1.185
  1.185
Average production assets, $m
  3,980
  6,149
  9,196
  13,343
  18,825
  25,880
  34,739
  45,614
  58,694
  74,135
  92,059
  112,551
  135,662
  161,411
  189,791
  220,772
  254,311
  290,353
  328,840
  369,714
  412,921
  458,417
  506,167
  556,149
  608,356
  662,794
  719,487
  778,472
  839,803
  903,549
Working capital, $m
  1,031
  1,593
  2,382
  3,456
  4,876
  6,704
  8,999
  11,816
  15,204
  19,204
  23,847
  29,155
  35,141
  41,811
  49,163
  57,188
  65,876
  75,212
  85,181
  95,769
  106,962
  118,747
  131,116
  144,063
  157,586
  171,688
  186,373
  201,652
  217,539
  234,052
Total debt, $m
  6,221
  12,142
  20,460
  31,781
  46,746
  66,006
  90,189
  119,878
  155,585
  197,738
  246,669
  302,610
  365,701
  435,993
  513,467
  598,044
  689,602
  787,993
  893,059
  1,004,641
  1,122,593
  1,246,792
  1,377,145
  1,513,591
  1,656,110
  1,804,722
  1,959,488
  2,120,512
  2,287,940
  2,461,961
Total liabilities, $m
  10,865
  16,787
  25,104
  36,425
  51,390
  70,650
  94,833
  124,522
  160,229
  202,382
  251,313
  307,254
  370,345
  440,637
  518,111
  602,688
  694,246
  792,637
  897,703
  1,009,285
  1,127,237
  1,251,436
  1,381,789
  1,518,235
  1,660,754
  1,809,366
  1,964,132
  2,125,156
  2,292,585
  2,466,605
Total equity, $m
  9,368
  14,473
  21,645
  31,406
  44,309
  60,914
  81,765
  107,362
  138,149
  174,494
  216,682
  264,914
  319,310
  379,916
  446,714
  519,636
  598,577
  683,410
  773,997
  870,203
  971,901
  1,078,985
  1,191,375
  1,309,019
  1,431,898
  1,560,031
  1,693,469
  1,832,304
  1,976,660
  2,126,700
Total liabilities and equity, $m
  20,233
  31,260
  46,749
  67,831
  95,699
  131,564
  176,598
  231,884
  298,378
  376,876
  467,995
  572,168
  689,655
  820,553
  964,825
  1,122,324
  1,292,823
  1,476,047
  1,671,700
  1,879,488
  2,099,138
  2,330,421
  2,573,164
  2,827,254
  3,092,652
  3,369,397
  3,657,601
  3,957,460
  4,269,245
  4,593,305
Debt-to-equity ratio
  0.660
  0.840
  0.950
  1.010
  1.060
  1.080
  1.100
  1.120
  1.130
  1.130
  1.140
  1.140
  1.150
  1.150
  1.150
  1.150
  1.150
  1.150
  1.150
  1.150
  1.160
  1.160
  1.160
  1.160
  1.160
  1.160
  1.160
  1.160
  1.160
  1.160
Adjusted equity ratio
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  949
  1,595
  2,493
  3,704
  5,290
  7,313
  9,833
  12,901
  16,564
  20,857
  26,200
  31,826
  38,136
  45,131
  52,805
  61,149
  70,148
  79,789
  90,054
  100,929
  112,401
  124,459
  137,096
  150,307
  164,093
  178,457
  193,407
  208,955
  225,117
  241,912
Depreciation, amort., depletion, $m
  706
  799
  928
  1,105
  1,338
  1,638
  2,015
  2,478
  3,035
  3,692
  3,917
  4,789
  5,773
  6,869
  8,076
  9,395
  10,822
  12,355
  13,993
  15,733
  17,571
  19,507
  21,539
  23,666
  25,887
  28,204
  30,616
  33,126
  35,736
  38,449
Funds from operations, $m
  1,656
  2,393
  3,421
  4,808
  6,628
  8,952
  11,848
  15,379
  19,598
  24,548
  30,117
  36,615
  43,909
  51,999
  60,881
  70,543
  80,970
  92,144
  104,047
  116,661
  129,972
  143,966
  158,635
  173,973
  189,981
  206,661
  224,024
  242,082
  260,853
  280,361
Change in working capital, $m
  387
  562
  789
  1,074
  1,420
  1,828
  2,295
  2,817
  3,388
  4,000
  4,643
  5,308
  5,987
  6,670
  7,351
  8,025
  8,688
  9,336
  9,970
  10,588
  11,192
  11,785
  12,369
  12,947
  13,523
  14,101
  14,685
  15,279
  15,887
  16,512
Cash from operations, $m
  1,269
  1,832
  2,632
  3,734
  5,208
  7,124
  9,553
  12,562
  16,210
  20,548
  25,474
  31,307
  37,922
  45,329
  53,530
  62,518
  72,282
  82,808
  94,077
  106,074
  118,780
  132,181
  146,266
  161,026
  176,457
  192,560
  209,338
  226,802
  244,966
  263,848
Maintenance CAPEX, $m
  -106
  -169
  -262
  -391
  -568
  -801
  -1,101
  -1,478
  -1,941
  -2,498
  -3,155
  -3,917
  -4,789
  -5,773
  -6,869
  -8,076
  -9,395
  -10,822
  -12,355
  -13,993
  -15,733
  -17,571
  -19,507
  -21,539
  -23,666
  -25,887
  -28,204
  -30,616
  -33,126
  -35,736
New CAPEX, $m
  -1,498
  -2,169
  -3,047
  -4,147
  -5,482
  -7,055
  -8,859
  -10,875
  -13,080
  -15,441
  -17,924
  -20,492
  -23,111
  -25,749
  -28,380
  -30,981
  -33,539
  -36,042
  -38,487
  -40,874
  -43,207
  -45,496
  -47,750
  -49,982
  -52,207
  -54,438
  -56,693
  -58,985
  -61,331
  -63,746
Cash from investing activities, $m
  -1,604
  -2,338
  -3,309
  -4,538
  -6,050
  -7,856
  -9,960
  -12,353
  -15,021
  -17,939
  -21,079
  -24,409
  -27,900
  -31,522
  -35,249
  -39,057
  -42,934
  -46,864
  -50,842
  -54,867
  -58,940
  -63,067
  -67,257
  -71,521
  -75,873
  -80,325
  -84,897
  -89,601
  -94,457
  -99,482
Free cash flow, $m
  -335
  -507
  -677
  -804
  -842
  -732
  -407
  208
  1,189
  2,610
  4,395
  6,898
  10,022
  13,807
  18,282
  23,460
  29,349
  35,944
  43,235
  51,207
  59,840
  69,114
  79,009
  89,505
  100,585
  112,234
  124,442
  137,201
  150,508
  164,366
Issuance/(repayment) of debt, $m
  4,074
  5,921
  8,318
  11,321
  14,965
  19,260
  24,183
  29,689
  35,707
  42,153
  48,931
  55,941
  63,090
  70,292
  77,474
  84,577
  91,558
  98,392
  105,066
  111,582
  117,952
  124,199
  130,353
  136,446
  142,519
  148,612
  154,766
  161,024
  167,429
  174,020
Issuance/(repurchase) of shares, $m
  2,564
  3,511
  4,679
  6,057
  7,613
  9,292
  11,018
  12,697
  14,223
  15,488
  15,988
  16,407
  16,261
  15,475
  13,993
  11,773
  8,793
  5,044
  534
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  6,638
  9,432
  12,997
  17,378
  22,578
  28,552
  35,201
  42,386
  49,930
  57,641
  64,919
  72,348
  79,351
  85,767
  91,467
  96,350
  100,351
  103,436
  105,600
  111,582
  117,952
  124,199
  130,353
  136,446
  142,519
  148,612
  154,766
  161,024
  167,429
  174,020
Total cash flow (excl. dividends), $m
  6,303
  8,925
  12,320
  16,574
  21,737
  27,820
  34,794
  42,593
  51,120
  60,251
  69,314
  79,245
  89,373
  99,575
  109,748
  119,810
  129,700
  139,380
  148,834
  162,788
  177,792
  193,314
  209,362
  225,951
  243,104
  260,846
  279,208
  298,225
  317,937
  338,386
Retained Cash Flow (-), $m
  -3,513
  -5,105
  -7,172
  -9,761
  -12,903
  -16,606
  -20,850
  -25,598
  -30,787
  -36,344
  -42,188
  -48,232
  -54,396
  -60,606
  -66,798
  -72,922
  -78,941
  -84,833
  -90,587
  -96,205
  -101,698
  -107,084
  -112,390
  -117,644
  -122,880
  -128,133
  -133,439
  -138,835
  -144,356
  -150,040
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  2,789
  3,820
  5,148
  6,813
  8,834
  11,214
  13,944
  16,996
  20,333
  23,906
  27,127
  31,013
  34,977
  38,969
  42,950
  46,888
  50,759
  54,547
  58,247
  66,583
  76,094
  86,229
  96,972
  108,308
  120,224
  132,713
  145,769
  159,390
  173,581
  188,346
Discount rate, %
  4.70
  4.94
  5.18
  5.44
  5.71
  6.00
  6.30
  6.61
  6.94
  7.29
  7.66
  8.04
  8.44
  8.86
  9.31
  9.77
  10.26
  10.77
  11.31
  11.88
  12.47
  13.09
  13.75
  14.44
  15.16
  15.92
  16.71
  17.55
  18.42
  19.35
PV of cash for distribution, $m
  2,664
  3,469
  4,424
  5,512
  6,691
  7,906
  9,093
  10,182
  11,112
  11,827
  12,050
  12,263
  12,198
  11,869
  11,306
  10,550
  9,648
  8,650
  7,604
  7,056
  6,450
  5,754
  5,010
  4,257
  3,529
  2,852
  2,247
  1,724
  1,287
  935
Current shareholders' claim on cash, %
  81.8
  68.6
  58.9
  51.6
  45.9
  41.5
  38.0
  35.2
  33.0
  31.2
  29.8
  28.7
  27.8
  27.1
  26.6
  26.3
  26.1
  26.0
  25.9
  25.9
  25.9
  25.9
  25.9
  25.9
  25.9
  25.9
  25.9
  25.9
  25.9
  25.9

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.

FINANCIAL RATIOS  of  Jacobs Engineering Group Inc. (JEC)

Valuation Ratios
P/E Ratio 33.7
Price to Sales 1
Price to Book 2.2
Price to Tangible Book
Price to Cash Flow 17.2
Price to Free Cash Flow 21.7
Growth Rates
Sales Growth Rate -8.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 51.3%
Cap. Spend. - 3 Yr. Gr. Rate -2.2%
Financial Strength
Quick Ratio 258
Current Ratio 0
LT Debt to Equity 5.3%
Total Debt to Equity 5.4%
Interest Coverage 31
Management Effectiveness
Return On Assets 4.1%
Ret/ On Assets - 3 Yr. Avg. 3.6%
Return On Total Capital 6.3%
Ret/ On T. Cap. - 3 Yr. Avg. 5.6%
Return On Equity 6.8%
Return On Equity - 3 Yr. Avg. 6.2%
Asset Turnover 1.4
Profitability Ratios
Gross Margin 17.7%
Gross Margin - 3 Yr. Avg. 16.7%
EBITDA Margin 5.3%
EBITDA Margin - 3 Yr. Avg. 4.7%
Operating Margin 3.9%
Oper. Margin - 3 Yr. Avg. 3.4%
Pre-Tax Margin 3.9%
Pre-Tax Margin - 3 Yr. Avg. 3.4%
Net Profit Margin 2.9%
Net Profit Margin - 3 Yr. Avg. 2.4%
Effective Tax Rate 27%
Eff/ Tax Rate - 3 Yr. Avg. 25.2%
Payout Ratio 18.4%

JEC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the JEC stock intrinsic value calculation we used $14985 million for the last fiscal year's total revenue generated by Jacobs Engineering Group Inc.. The default revenue input number comes from 0001 income statement of Jacobs Engineering Group Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our JEC stock valuation model: a) initial revenue growth rate of 60% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.7%, whose default value for JEC is calculated based on our internal credit rating of Jacobs Engineering Group Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Jacobs Engineering Group Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of JEC stock the variable cost ratio is equal to 94.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $128 million in the base year in the intrinsic value calculation for JEC stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 6.4% for Jacobs Engineering Group Inc..

Corporate tax rate of 27% is the nominal tax rate for Jacobs Engineering Group Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the JEC stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for JEC are equal to 16.6%.

Life of production assets of 23.5 years is the average useful life of capital assets used in Jacobs Engineering Group Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for JEC is equal to 4.3%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $5854.345 million for Jacobs Engineering Group Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 139.547 million for Jacobs Engineering Group Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Jacobs Engineering Group Inc. at the current share price and the inputted number of shares is $11.5 billion.

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