Jacobs Solutions (J)

Global professional services company Jacobs Solutions (NYSE:J) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 6.6% year on year to $3.15 billion. Its non-GAAP profit of $1.75 per share was 4.2% above analysts’ consensus estimates.

Company Overview

With a workforce of approximately 45,000 professionals tackling complex challenges from water scarcity to cybersecurity, Jacobs Solutions (NYSE:J) provides engineering, consulting, and technical services focused on infrastructure, sustainability, and advanced technology solutions.

The sector has historically benefitted from steady government spending on defense, infrastructure, and regulatory compliance, providing firms long-term contract stability. However, the Trump administration is showing more willingness than previous administrations to upend government spending and bloat. Whether or not defense budgets get cut, the rising demand for cybersecurity, AI-driven defense solutions, and sustainability consulting should benefit the sector for years, as agencies and enterprises seek expertise in navigating complex technology and regulations. Additionally, industrial automation and digital engineering are driving efficiency gains in infrastructure and technical consulting projects, which could help profit margins.

Jacobs Solutions competes with global engineering and consulting firms like AECOM, WSP, Tetra Tech, and Arcadis in the infrastructure space, while also facing competition from management consulting firms such as Accenture, Deloitte, and McKinsey & Company in its advisory services.

Examining a company’s long-term performance can provide clues about its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.

With $12.03 billion in revenue over the past 12 months, Jacobs Solutions is one of the larger companies in the business services industry and benefits from a well-known brand that influences purchasing decisions. However, its scale is a double-edged sword because it’s challenging to maintain high growth rates when you’ve already captured a large portion of the addressable market. For Jacobs Solutions to boost its sales, it likely needs to adjust its prices, launch new offerings, or lean into foreign markets.

As you can see below, Jacobs Solutions struggled to generate demand over the last five years. Its sales dropped by 2.4% annually, a rough starting point for our analysis.

Long-term growth is the most important, but within business services, a half-decade historical view may miss new innovations or demand cycles. Jacobs Solutions’s annualized revenue growth of 5.3% over the last two years is above its five-year trend, suggesting some bright spots.

We can better understand the company’s revenue dynamics by analyzing its backlog, or the value of its outstanding orders that have not yet been executed or delivered. Jacobs Solutions’s backlog reached $23.06 billion in the latest quarter and averaged 12.2% year-on-year growth over the last two years. Because this number is better than its revenue growth, we can see the company accumulated more orders than it could fulfill and deferred revenue to the future. This could imply elevated demand for Jacobs Solutions’s products and services but raises concerns about capacity constraints.

This quarter, Jacobs Solutions reported year-on-year revenue growth of 6.6%, and its $3.15 billion of revenue exceeded Wall Street’s estimates by 0.7%.

Looking ahead, sell-side analysts expect revenue to grow 6.9% over the next 12 months, an improvement versus the last two years. This projection is above average for the sector and implies its newer products and services will fuel better top-line performance.

Jacobs Solutions was profitable over the last five years but held back by its large cost base. Its average operating margin of 6.1% was weak for a business services business.

On the plus side, Jacobs Solutions’s operating margin rose by 2.3 percentage points over the last five years.

In Q3, Jacobs Solutions generated an operating margin profit margin of 6.7%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for Jacobs Solutions, its EPS and revenue declined by 1.1% and 2.4% annually over the last five years. We tend to steer our readers away from companies with falling revenue and EPS, where diminishing earnings could imply changing secular trends and preferences. If the tide turns unexpectedly, Jacobs Solutions’s low margin of safety could leave its stock price susceptible to large downswings.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Jacobs Solutions, its two-year annual EPS growth of 1.1% was higher than its five-year trend. Accelerating earnings growth is almost always an encouraging data point.

In Q3, Jacobs Solutions reported adjusted EPS of $1.75, up from $1.41 in the same quarter last year. This print beat analysts’ estimates by 4.2%. Over the next 12 months, Wall Street expects Jacobs Solutions’s full-year EPS of $6.05 to grow 17.1%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Jacobs Solutions has shown decent cash profitability, giving it some flexibility to reinvest or return capital to investors. The company’s free cash flow margin averaged 5.3% over the last five years, slightly better than the broader business services sector.

Jacobs Solutions’s free cash flow clocked in at $353.5 million in Q3, equivalent to a 11.2% margin. This result was good as its margin was 5.9 percentage points higher than in the same quarter last year, but we wouldn’t put too much weight on the short term because investment needs can be seasonal, causing temporary swings. Long-term trends carry greater meaning.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Jacobs Solutions historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 8.6%, somewhat low compared to the best business services companies that consistently pump out 25%+.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Fortunately, Jacobs Solutions’s ROIC averaged 3.5 percentage point increases over the last few years. This is a good sign, and we hope the company can continue improving.

Jacobs Solutions reported $1.24 billion of cash and $2.71 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $1.21 billion of EBITDA over the last 12 months, we view Jacobs Solutions’s 1.2× net-debt-to-EBITDA ratio as safe. We also see its $55.96 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was good to see Jacobs Solutions beat analysts’ EPS expectations this quarter. We were also happy its full-year EPS guidance narrowly outperformed Wall Street’s estimates. Overall, this print had some key positives. The stock traded up 1.4% to $147.10 immediately after reporting.

Updated: December 3, 2025 at 10:27 PM EST

Are you wondering whether to buy Jacobs Solutions or pass? We urge investors to not only consider the latest earnings results but also longer-term business quality and valuation as well.

We cheer for all companies making their customers lives easier, but in the case of Jacobs Solutions, we’ll be cheering from the sidelines. For starters, its revenue has declined over the last five years. And while its projected EPS for the next year implies the company’s fundamentals will improve, the downside is its weak EPS growth over the last five years shows it’s failed to produce meaningful profits for shareholders. On top of that, its mediocre ROIC lags the market and is a headwind for its stock price.

Jacobs Solutions’s P/E ratio based on the next 12 months is 19x. This valuation tells us a lot of optimism is priced in - we think there are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $156.53 on the company (compared to the current share price of $137.93).