Intrinsic value of Jacobs Engineering Group - JEC

Previous Close

$72.00

  Intrinsic Value

$95.51

stock screener

  Rating & Target

buy

+33%

Previous close

$72.00

 
Intrinsic value

$95.51

 
Up/down potential

+33%

 
Rating

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 10.2

 

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
  16,036
  24,776
  37,053
  53,762
  75,850
  104,277
  139,970
  183,790
  236,493
  298,709
  370,929
  453,497
  546,616
  650,365
  764,714
  889,546
  1,024,682
  1,169,904
  1,324,978
  1,489,668
  1,663,761
  1,847,075
  2,039,471
  2,240,861
  2,451,214
  2,670,560
  2,898,989
  3,136,655
  3,383,773
  3,640,621
Variable operating expenses, $m
  15,339
  23,516
  35,003
  50,637
  71,304
  97,901
  131,297
  172,297
  221,608
  279,821
  347,059
  424,313
  511,440
  608,513
  715,503
  832,302
  958,742
  1,094,619
  1,239,713
  1,393,806
  1,556,696
  1,728,213
  1,908,228
  2,096,659
  2,293,475
  2,498,705
  2,712,434
  2,934,806
  3,166,022
  3,406,341
Fixed operating expenses, $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 operating expenses, $m
  15,339
  23,516
  35,003
  50,637
  71,304
  97,901
  131,297
  172,297
  221,608
  279,821
  347,059
  424,313
  511,440
  608,513
  715,503
  832,302
  958,742
  1,094,619
  1,239,713
  1,393,806
  1,556,696
  1,728,213
  1,908,228
  2,096,659
  2,293,475
  2,498,705
  2,712,434
  2,934,806
  3,166,022
  3,406,341
Operating income, $m
  698
  1,260
  2,050
  3,125
  4,547
  6,376
  8,673
  11,493
  14,884
  18,888
  23,870
  29,183
  35,176
  41,852
  49,210
  57,244
  65,940
  75,285
  85,264
  95,862
  107,065
  118,862
  131,243
  144,203
  157,739
  171,854
  186,554
  201,848
  217,751
  234,279
EBITDA, $m
  1,140
  1,761
  2,634
  3,822
  5,392
  7,413
  9,950
  13,065
  16,811
  21,234
  26,367
  32,237
  38,856
  46,231
  54,360
  63,233
  72,839
  83,162
  94,186
  105,893
  118,268
  131,299
  144,975
  159,291
  174,244
  189,836
  206,074
  222,968
  240,535
  258,793
Interest expense (income), $m
  13
  13
  108
  248
  443
  709
  1,060
  1,512
  2,080
  2,777
  3,615
  4,605
  5,753
  7,067
  8,548
  10,198
  12,017
  14,002
  16,152
  18,462
  20,928
  23,548
  26,317
  29,233
  32,293
  35,496
  38,842
  42,331
  45,964
  49,744
  53,675
Earnings before tax, $m
  685
  1,152
  1,803
  2,683
  3,838
  5,316
  7,161
  9,413
  12,108
  15,273
  19,265
  23,430
  28,109
  33,304
  39,012
  45,227
  51,937
  59,133
  66,803
  74,934
  83,518
  92,545
  102,010
  111,910
  122,243
  133,013
  144,223
  155,884
  168,006
  180,604
Tax expense, $m
  185
  311
  487
  724
  1,036
  1,435
  1,933
  2,542
  3,269
  4,124
  5,202
  6,326
  7,589
  8,992
  10,533
  12,211
  14,023
  15,966
  18,037
  20,232
  22,550
  24,987
  27,543
  30,216
  33,006
  35,913
  38,940
  42,089
  45,362
  48,763
Net income, $m
  500
  841
  1,316
  1,958
  2,802
  3,881
  5,228
  6,872
  8,839
  11,149
  14,064
  17,104
  20,520
  24,312
  28,479
  33,016
  37,914
  43,167
  48,766
  54,702
  60,968
  67,558
  74,468
  81,694
  89,238
  97,099
  105,283
  113,796
  122,645
  131,841

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
  11,809
  18,245
  27,285
  39,589
  55,855
  76,787
  103,071
  135,338
  174,148
  219,963
  273,144
  333,944
  402,515
  478,914
  563,118
  655,041
  754,552
  861,491
  975,683
  1,096,957
  1,225,156
  1,360,144
  1,501,820
  1,650,119
  1,805,018
  1,966,539
  2,134,749
  2,309,760
  2,491,733
  2,680,869
Adjusted assets (=assets-cash), $m
  11,809
  18,245
  27,285
  39,589
  55,855
  76,787
  103,071
  135,338
  174,148
  219,963
  273,144
  333,944
  402,515
  478,914
  563,118
  655,041
  754,552
  861,491
  975,683
  1,096,957
  1,225,156
  1,360,144
  1,501,820
  1,650,119
  1,805,018
  1,966,539
  2,134,749
  2,309,760
  2,491,733
  2,680,869
Revenue / Adjusted assets
  1.358
  1.358
  1.358
  1.358
  1.358
  1.358
  1.358
  1.358
  1.358
  1.358
  1.358
  1.358
  1.358
  1.358
  1.358
  1.358
  1.358
  1.358
  1.358
  1.358
  1.358
  1.358
  1.358
  1.358
  1.358
  1.358
  1.358
  1.358
  1.358
  1.358
Average production assets, $m
  3,239
  5,005
  7,485
  10,860
  15,322
  21,064
  28,274
  37,126
  47,772
  60,339
  74,928
  91,606
  110,416
  131,374
  154,472
  179,688
  206,986
  236,321
  267,645
  300,913
  336,080
  373,109
  411,973
  452,654
  495,145
  539,453
  585,596
  633,604
  683,522
  735,405
Working capital, $m
  481
  743
  1,112
  1,613
  2,276
  3,128
  4,199
  5,514
  7,095
  8,961
  11,128
  13,605
  16,398
  19,511
  22,941
  26,686
  30,740
  35,097
  39,749
  44,690
  49,913
  55,412
  61,184
  67,226
  73,536
  80,117
  86,970
  94,100
  101,513
  109,219
Total debt, $m
  2,009
  4,583
  8,200
  13,121
  19,627
  28,000
  38,514
  51,421
  66,945
  85,271
  106,543
  130,863
  158,292
  188,851
  222,533
  259,302
  299,106
  341,882
  387,559
  436,069
  487,348
  541,343
  598,013
  657,333
  719,293
  783,901
  851,185
  921,190
  993,979
  1,069,633
Total liabilities, $m
  4,724
  7,298
  10,914
  15,836
  22,342
  30,715
  41,228
  54,135
  69,659
  87,985
  109,258
  133,578
  161,006
  191,566
  225,247
  262,016
  301,821
  344,596
  390,273
  438,783
  490,062
  544,058
  600,728
  660,047
  722,007
  786,616
  853,899
  923,904
  996,693
  1,072,348
Total equity, $m
  7,085
  10,947
  16,371
  23,753
  33,513
  46,072
  61,842
  81,203
  104,489
  131,978
  163,886
  200,367
  241,509
  287,348
  337,871
  393,025
  452,731
  516,894
  585,410
  658,174
  735,093
  816,086
  901,092
  990,071
  1,083,011
  1,179,923
  1,280,849
  1,385,856
  1,495,040
  1,608,522
Total liabilities and equity, $m
  11,809
  18,245
  27,285
  39,589
  55,855
  76,787
  103,070
  135,338
  174,148
  219,963
  273,144
  333,945
  402,515
  478,914
  563,118
  655,041
  754,552
  861,490
  975,683
  1,096,957
  1,225,155
  1,360,144
  1,501,820
  1,650,118
  1,805,018
  1,966,539
  2,134,748
  2,309,760
  2,491,733
  2,680,870
Debt-to-equity ratio
  0.280
  0.420
  0.500
  0.550
  0.590
  0.610
  0.620
  0.630
  0.640
  0.650
  0.650
  0.650
  0.660
  0.660
  0.660
  0.660
  0.660
  0.660
  0.660
  0.660
  0.660
  0.660
  0.660
  0.660
  0.660
  0.660
  0.660
  0.660
  0.660
  0.660
Adjusted equity ratio
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  500
  841
  1,316
  1,958
  2,802
  3,881
  5,228
  6,872
  8,839
  11,149
  14,064
  17,104
  20,520
  24,312
  28,479
  33,016
  37,914
  43,167
  48,766
  54,702
  60,968
  67,558
  74,468
  81,694
  89,238
  97,099
  105,283
  113,796
  122,645
  131,841
Depreciation, amort., depletion, $m
  442
  501
  584
  696
  845
  1,036
  1,277
  1,572
  1,927
  2,346
  2,498
  3,054
  3,681
  4,379
  5,149
  5,990
  6,900
  7,877
  8,922
  10,030
  11,203
  12,437
  13,732
  15,088
  16,505
  17,982
  19,520
  21,120
  22,784
  24,514
Funds from operations, $m
  942
  1,342
  1,900
  2,655
  3,647
  4,917
  6,504
  8,443
  10,765
  13,495
  16,561
  20,157
  24,200
  28,691
  33,628
  39,005
  44,814
  51,045
  57,687
  64,732
  72,171
  79,995
  88,200
  96,783
  105,742
  115,081
  124,803
  134,916
  145,429
  156,355
Change in working capital, $m
  180
  262
  368
  501
  663
  853
  1,071
  1,315
  1,581
  1,867
  2,167
  2,477
  2,794
  3,112
  3,430
  3,745
  4,054
  4,357
  4,652
  4,941
  5,223
  5,499
  5,772
  6,042
  6,311
  6,580
  6,853
  7,130
  7,414
  7,705
Cash from operations, $m
  762
  1,080
  1,531
  2,153
  2,984
  4,064
  5,433
  7,129
  9,184
  11,628
  14,395
  17,680
  21,406
  25,579
  30,198
  35,260
  40,760
  46,688
  53,035
  59,792
  66,948
  74,496
  82,428
  90,741
  99,432
  108,501
  117,950
  127,786
  138,015
  148,649
Maintenance CAPEX, $m
  -67
  -108
  -167
  -249
  -362
  -511
  -702
  -942
  -1,238
  -1,592
  -2,011
  -2,498
  -3,054
  -3,681
  -4,379
  -5,149
  -5,990
  -6,900
  -7,877
  -8,922
  -10,030
  -11,203
  -12,437
  -13,732
  -15,088
  -16,505
  -17,982
  -19,520
  -21,120
  -22,784
New CAPEX, $m
  -1,215
  -1,765
  -2,480
  -3,375
  -4,462
  -5,742
  -7,210
  -8,852
  -10,646
  -12,568
  -14,588
  -16,679
  -18,810
  -20,957
  -23,098
  -25,216
  -27,298
  -29,335
  -31,325
  -33,267
  -35,167
  -37,029
  -38,864
  -40,681
  -42,491
  -44,308
  -46,143
  -48,009
  -49,918
  -51,883
Cash from investing activities, $m
  -1,282
  -1,873
  -2,647
  -3,624
  -4,824
  -6,253
  -7,912
  -9,794
  -11,884
  -14,160
  -16,599
  -19,177
  -21,864
  -24,638
  -27,477
  -30,365
  -33,288
  -36,235
  -39,202
  -42,189
  -45,197
  -48,232
  -51,301
  -54,413
  -57,579
  -60,813
  -64,125
  -67,529
  -71,038
  -74,667
Free cash flow, $m
  -520
  -794
  -1,115
  -1,471
  -1,840
  -2,188
  -2,479
  -2,665
  -2,699
  -2,532
  -2,205
  -1,496
  -457
  941
  2,720
  4,895
  7,473
  10,454
  13,833
  17,603
  21,751
  26,263
  31,127
  36,328
  41,852
  47,688
  53,826
  60,257
  66,977
  73,982
Issuance/(repayment) of debt, $m
  1,771
  2,574
  3,616
  4,922
  6,506
  8,373
  10,513
  12,907
  15,524
  18,326
  21,272
  24,320
  27,428
  30,559
  33,682
  36,769
  39,805
  42,775
  45,677
  48,510
  51,279
  53,995
  56,670
  59,320
  61,960
  64,608
  67,284
  70,005
  72,789
  75,655
Issuance/(repurchase) of shares, $m
  2,157
  3,021
  4,108
  5,424
  6,957
  8,679
  10,543
  12,489
  14,447
  16,340
  17,845
  19,377
  20,623
  21,527
  22,043
  22,138
  21,792
  20,996
  19,750
  18,063
  15,951
  13,435
  10,538
  7,285
  3,702
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  3,928
  5,595
  7,724
  10,346
  13,463
  17,052
  21,056
  25,396
  29,971
  34,666
  39,117
  43,697
  48,051
  52,086
  55,725
  58,907
  61,597
  63,771
  65,427
  66,573
  67,230
  67,430
  67,208
  66,605
  65,662
  64,608
  67,284
  70,005
  72,789
  75,655
Total cash flow (excl. dividends), $m
  3,408
  4,801
  6,609
  8,874
  11,624
  14,863
  18,577
  22,731
  27,271
  32,134
  36,912
  42,201
  47,594
  53,027
  58,445
  63,803
  69,070
  74,225
  79,260
  84,175
  88,981
  93,694
  98,335
  102,932
  107,514
  112,296
  121,110
  130,262
  139,766
  149,637
Retained Cash Flow (-), $m
  -2,657
  -3,862
  -5,424
  -7,382
  -9,759
  -12,560
  -15,770
  -19,361
  -23,286
  -27,489
  -31,909
  -36,480
  -41,143
  -45,839
  -50,522
  -55,154
  -59,707
  -64,163
  -68,515
  -72,765
  -76,919
  -80,993
  -85,006
  -88,979
  -92,940
  -96,913
  -100,926
  -105,007
  -109,183
  -113,482
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
  751
  940
  1,185
  1,492
  1,865
  2,304
  2,807
  3,370
  3,986
  4,645
  5,004
  5,721
  6,452
  7,188
  7,923
  8,649
  9,363
  10,062
  10,744
  11,410
  12,062
  12,701
  13,330
  13,953
  14,574
  15,384
  20,184
  25,255
  30,583
  36,155
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  720
  860
  1,031
  1,228
  1,445
  1,672
  1,897
  2,107
  2,290
  2,435
  2,376
  2,441
  2,453
  2,413
  2,326
  2,198
  2,037
  1,853
  1,654
  1,450
  1,248
  1,054
  874
  711
  567
  449
  433
  391
  334
  272
Current shareholders' claim on cash, %
  82.6
  69.7
  59.9
  52.4
  46.5
  41.8
  38.0
  35.0
  32.5
  30.4
  28.7
  27.3
  26.2
  25.2
  24.4
  23.7
  23.1
  22.7
  22.3
  22.0
  21.8
  21.6
  21.5
  21.4
  21.4
  21.4
  21.4
  21.4
  21.4
  21.4

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 (JEC)

Valuation Ratios
P/E Ratio 29.5
Price to Sales 0.9
Price to Book 2
Price to Tangible Book
Price to Cash Flow 15.1
Price to Free Cash Flow 19
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 $10022.788 million for the last fiscal year's total revenue generated by Jacobs Engineering Group. The default revenue input number comes from 0001 income statement of Jacobs Engineering Group. 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 4.3%, whose default value for JEC is calculated based on our internal credit rating of Jacobs Engineering Group, 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.
    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 96.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 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 5.4% for Jacobs Engineering Group.

Corporate tax rate of 27% is the nominal tax rate for Jacobs Engineering Group. 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 20.2%.

Life of production assets of 30.3 years is the average useful life of capital assets used in Jacobs Engineering Group 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 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 - $4428.352 million for Jacobs Engineering Group - 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 141.904 million for Jacobs Engineering Group 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 at the current share price and the inputted number of shares is $10.2 billion.

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COMPANY NEWS

▶ Jacobs Declares Quarterly Dividend   [Sep-11-18 01:47PM  PR Newswire]
▶ Sluggish Start to September   [09:15AM  Zacks]
▶ Stocks Move Slowly but Surely Higher   [Aug-21-18 09:15AM  Zacks]
▶ Jacobs Former Chairman and CEO Noel Watson Passes Away   [Aug-13-18 05:02PM  PR Newswire]
▶ Company News For Aug 7, 2018   [10:17AM  Zacks]
▶ Stocks Slip As Intel Downgrade Crimps Dow, Qualcomm Upgraded   [09:40AM  Investor's Business Daily]
▶ Jacobs Engineering: Fiscal 3Q Earnings Snapshot   [07:05AM  Associated Press]
▶ Jacobs Declares Quarterly Dividend   [Jul-19-18 01:44PM  PR Newswire]
▶ Jacobs Secures Key Role on Etihad Rail Project in UAE   [Jul-12-18 07:45AM  PR Newswire]
▶ New Strong Buy Stocks for June 28th   [Jun-28-18 10:56AM  Zacks]
▶ New Strong Buy Stocks for June 21st   [Jun-21-18 09:35AM  Zacks]

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