President-elect Trump may put Jacobs Engineering to work -- but the incoming president isn't the only catalyst. Image source: Getty Images.
Continue Reading Below
Shares of construction and engineering powerhouse Jacobs Engineering (NYSE: JEC) are performing well for investors today, up 11% as of 2:45 p.m. EST, and up close to 12% earlier in the day. Part of the credit for this spike in the shares goes to President-elect Donald Trump -- a well-known builder in his own right, and one expected to usher in a flood of new infrastructure construction over the next four years.
Part of the credit goes to President-elect Trump, as I say -- but not all of it.
Election results aside, Jacobs Engineering is also benefiting today from some company-specific news. Specifically, the company announced today that it has landed "a string of recent contract wins" related to the Australian Government's $3.4 billion "Smart Cities Plan," through which that nation will invest "more than $3.4 billion in urban rail projects across the country."
Continue Reading Below
Jacobs says it has won contracts related to Australia's Hurstbridge Rail Line Upgrade, thePakenham Rail Depotprojects in Victoria, the Bruce Highway Upgrade in Queensland, Westconnex, the Darlington Upgrade Project, the Forrestfield Airport Link, and the Sydney CBD Light Rail.When combined with the infrastructure business it might win here at home over the next four years, this has investors feeling optimistic about Jacobs stock.
Precisely how much of Australia's $3.4 billion in infrastructure spending will go directly into Jacobs Engineering's pocket remains to be seen. With roles in no fewer than seven separate projects, though, one imagines Jacobs' share will be substantial. Perhaps even substantial enough to move the needle on an $11.4 billion annual business such as Jacobs.
As to the question of whether all of this new business will juice Jacobs' stock price -- currently worth more than 32 times annual earnings, despite the fact that analysts expect Jacobs to grow profits only in the mid-single-digits over the next five years -- that remains to be seen.
Personally, I'd be cautious.
10 stocks we like better than Jacobs Engineering Group
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now...and Jacobs Engineering Group wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of November 7, 2016
Fool contributorRich Smithdoes not own shares of, nor is he short, any company named above. You can find him onMotley Fool CAPS, publicly pontificating under the handleTMFDitty, where he currently ranks No. 336 out of more than 75,000 rated members.
The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.