Jacobs Engineering Group (JEC) versus Sterling Construction (STRL) Financial Analysis

Jacobs Engineering Group (NYSE: JEC) and Sterling Construction (NASDAQ:STRL) are both construction companies, but which is the better stock? We will compare the two businesses based on the strength of their institutional ownership, earnings, risk, profitabiliy, dividends, analyst recommendations and valuation.

Institutional and Insider Ownership

87.4% of Jacobs Engineering Group shares are held by institutional investors. Comparatively, 74.6% 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 company is poised for long-term growth.

Earnings & Valuation

This table compares Jacobs Engineering Group and Sterling Construction’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Jacobs Engineering Group $10.19 billion 0.64 $630.50 million $1.72 31.47
Sterling Construction $773.80 million 0.39 $21.50 million ($0.11) -100.99

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.

Dividends

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.

Risk & Volatility

Jacobs Engineering Group has a beta of 1.52, meaning that its share price is 52% more volatile than the S&P 500. Comparatively, Sterling Construction has a beta of 0.35, meaning that its share price is 65% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Jacobs Engineering Group and Sterling Construction, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Jacobs Engineering Group 0 8 2 0 2.20
Sterling Construction 0 0 2 0 3.00

Jacobs Engineering Group currently has a consensus target price of $61.60, suggesting a potential upside of 13.82%. Sterling Construction has a consensus target price of $15.00, suggesting a potential upside of 35.01%. Given Sterling Construction’s stronger consensus rating and higher possible upside, analysts clearly believe Sterling Construction is more favorable than Jacobs Engineering Group.

Profitability

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%
Sterling Construction -0.33% 0.06% 0.02%

Summary

Jacobs Engineering Group beats Sterling Construction on 10 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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