JACOBS SOLUTIONS INC. (J): what the price assumes

In the published model solve dated 2026-Q2, anchored at $151.98, JACOBS SOLUTIONS INC. (J) is priced for today's economics sustained for ~5.2 years. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-27.

Generated: 2026-08-30 · Exported: 2026-08-31 · Source: https://boothcheck.com/report/J

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 8.3% cost of capital; growth searched up to the 25% self-funding ceiling.

How unusual the bet is: elevated (limited comparison data)

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.5%); the inversion above states its own rate.

Per-Model Detail (n=14)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Bullet Takeaways

• Jacobs is a professional-services firm that designs and manages large infrastructure and advanced-facilities projects, and the single most important number it reports is backlog, which reached a record $27.0 billion, up 22% year over year, with a trailing book-to-bill ratio of 1.4 times.
• At $121.07 only the forward-growth method reaches the price; the asset, earnings-power, and peer-multiple methods all say richly valued, so the price is a bet on durable compounding the static frames cannot capture.
• The growth is being pulled by data centers and semiconductors, with the data-center business up more than 100% year over year and the AI-infrastructure pipeline up 400%, which lifted fiscal 2026 adjusted EPS guidance to $7.10 to $7.35.

Bull Case

The number that anchors the Jacobs thesis is backlog, and at a record $27.0 billion it is the metric that, if it holds, makes the rest of the model fall into place. Backlog is the contracted work Jacobs has won but not yet delivered, and it grew 22% year over year while the trailing book-to-bill ran at 1.4 times, meaning the company is winning new work faster than it is burning through the old. For a services firm, a book-to-bill above one is the clearest forward signal there is, and 1.4 is exceptional. The 10-K is careful that backlog converts at varying amounts and timing, noting that "in the event of a project cancellation, we would generally have no contractual right to the total revenue reflected in our backlog," but the trend in bookings is the leading indicator, and it is pointed sharply up.

What is filling that backlog is the most attractive part of the story. Jacobs is levered to exactly the secular spend the market is paying premiums for elsewhere: its data-center business grew more than 100% year over year and its AI-infrastructure pipeline expanded 400%, with visibility management says extends into 2027 and 2028. Within Infrastructure and Advanced Facilities, growth was broad-based across data centers, semiconductors, water, energy and power, and transportation. This is a capital-light way to play the AI and reshoring build-out: Jacobs sells engineering, design, and program-management expertise rather than commodity construction, so it captures the high-value, high-margin slice of these mega-projects without carrying the construction balance-sheet risk.

The operating results show the model converting backlog into profit. Fiscal second-quarter gross revenue rose 27% to $3.7 billion, adjusted net revenue grew 8.8%, adjusted EPS jumped 22% to $1.75 on 9% organic net-revenue growth, and margins expanded 70 basis points. Management raised fiscal 2026 guidance to 8% to 10.5% organic net-revenue growth and adjusted EPS of $7.10 to $7.35, and lifted its adjusted EBITDA margin target. The recently completed PA Consulting acquisition adds a higher-margin advisory layer and raised cost-synergy estimates. The forward-growth method that reaches the current price is, in effect, crediting Jacobs as a durable compounder riding the strongest infrastructure demand in a generation, which is exactly what the record backlog and book-to-bill describe.

Bear Case

The uncomfortable reality for a Jacobs holder is that the company is being valued as a high-growth compounder while its reported financial statements look like those of a thin-margin services contractor. The GAAP operating margin is under 3%, and reported net income is modest relative to the market value, which is why every static valuation method that anchors on actual earnings, the earnings-power value, the excess-return methods, the residual-income method, and the peer-multiple methods, all land far below the $121 price. The price needs the adjusted, forward story to be the true one; on the numbers the company actually books, the stock is expensive by a wide margin. That gap between the optimistic forward framing and the unglamorous reported reality is the central risk.

The quantitative disconnect compounds when leverage enters the picture. Jacobs carries about $2.7 billion of net debt, net debt near 4.5 times operating income, and interest coverage around four times, which is modest for a business whose earnings depend on project execution and timing. Backlog is comforting, but it is not contracted certainty: the 10-K states plainly that on a cancellation the company has "no contractual right to the total revenue reflected in our backlog," and large infrastructure projects are exactly the kind that get deferred, rescoped, or cancelled when budgets tighten or financing dries up. A book-to-bill of 1.4 is a snapshot; a few large project delays or cancellations in the data-center pipeline would turn the leading indicator the bull case relies on.

The demand concentration is the other quiet risk. A large and growing share of the backlog now rides on the data-center and AI-infrastructure boom, with the pipeline up 400%. That is wonderful while the build-out runs hot, but it ties an increasing portion of Jacobs's growth to a single, capital-intensive, sentiment-driven theme that could cool abruptly if AI-infrastructure spending consolidates or hyperscaler budgets pull back. The framework flags the name as elevated, with a cohort signal tripped, because the price sits above where its peers and its own static economics justify. The bear case is that the stock prices a long runway of premium growth and margin expansion, on top of a leveraged balance sheet and reported margins that do not yet match the narrative, leaving little cushion if backlog conversion or the AI cycle disappoints.

Valuation

Jacobs is an elevated case in this framework: at $121.07, only the forward-growth method reaches the price, while the asset, earnings-power, and peer-multiple families all say richly valued. The relative-valuation method lands near $74, the earnings-power value near $42, the excess-return and residual-income methods in the high thirties, and EV/EBITDA near $36. The discounted-future-market-cap method reaches roughly $115, essentially today's price, by projecting revenue forward and applying a terminal multiple. The blended figure across the static methods is near $57, which is the framework's way of saying the price embeds a large premium for durable compounding the present financials cannot support.

The reason for the gap is the difference between reported and adjusted earnings. Jacobs's GAAP margin is under 3%, depressed by amortization, transaction, and separation-related costs, while its adjusted EPS guidance of $7.10 to $7.35 implies a far healthier underlying profitability. The valuation question is which to believe: on adjusted earnings and the record backlog, a premium multiple is defensible for a business growing organically at 8% to 10% with exposure to the strongest infrastructure demand in years; on reported earnings, the stock is expensive. The inversion treats the price as a bet on durable growth and margin expansion sustained over a long runway, which is coherent given the book-to-bill of 1.4 but is nonetheless an extrapolation.

Leverage is a real part of the valuation. Net debt of about $2.7 billion runs near 4.5 times operating income with interest coverage around four times, which is manageable in a growing services business but tightens if project timing slips. The recent quarter beat and the guidance raise support the optimistic path, but the price has already moved to reflect it.

Catalysts

Jacobs's fiscal second quarter of 2026 was strong enough to drive another guidance raise. Gross revenue rose 27% to $3.7 billion, adjusted net revenue grew 8.8% to $2.3 billion, and adjusted EPS jumped 22% to $1.75 on 9% organic net-revenue growth and 70 basis points of margin expansion. Backlog reached a record $27.0 billion, up 22% year over year, with a trailing book-to-bill of 1.4 times. Management lifted fiscal 2026 guidance to 8% to 10.5% organic adjusted net-revenue growth and adjusted EPS of $7.10 to $7.35, and raised its adjusted EBITDA margin target to 14.6% to 14.9%.

The dominant catalyst is the data-center and AI-infrastructure cycle, where Jacobs reported its data-center business up more than 100% year over year and its AI-infrastructure pipeline up 400%, with visibility into 2027 and 2028. The company also completed the PA Consulting acquisition and raised its cost-synergy estimate to more than $20 million within 24 months. The concrete things to watch are whether bookings keep the book-to-bill above one, whether the data-center pipeline converts into signed backlog on schedule, the pace of margin expansion toward the raised EBITDA target, and progress on deleveraging from the current net-debt level. Because the price already reflects the optimistic path, the catalyst that matters most is sustained backlog conversion at improving margins, while any cooling of the AI-infrastructure spend is the risk that would test the elevated valuation.

Peer Cohorts (Per Segment, With Filing Citations)

Infrastructure & Advanced Facilities (reported)

• ACM (AECOM)
• FY2025 10-K: …types of customers. • Americas : Planning, advisory, consulting, architectural and engineering design, construction management and program management services to public and private clients in the United States, Canada, and Latin America in major end markets such as transportation, water, government, facilities,…
• FY2025 10-K: …together with the New Revolving Credit Facility, the "New Pro Rata Facilities") and a new $ 700,000,000 term loan B facility (the "New Term B Facility" and, together with the New Pro Rata Facilities, the "New Credit Facilities"). The New Revolving Credit Facility and the New Term A Facility mature on April 19, 2029.…
• TTEK (TETRA TECH, INC.)
• FY2025 10-K: …for commercial and government clients across the municipal water, energy, transportation, defense and manufacturing sectors. Both CAW and SAGE are included in our CIG segment. In fiscal 2024, we acquired LS Technologies ("LST"), an innovative U.S. federal enterprise technology services and management consulting firm…
• FY2025 10-K: …Revolving Credit Facility"). On October 26, 2022, we entered into a Third Amended and Restated Credit Agreement ("Third Amended Credit Agreement") that provided for an additional $ 500 million senior secured term loan facility ("Third Term Loan Facility") increasing our total borrowing capacity to $ 1.55 billion. On…
• STRL (Sterling Infrastructure, Inc.)
• FY2025 10-K: …E-Infrastructure Solutions business is driven by our customers' investments in the development of data centers, advanced manufacturing centers, e-commerce distribution centers and warehouses. We foresee significant growth opportunities tied to the implementation of multi-year capital deployment plans by data center…
• FY2025 10-K: …of vested equity awards. Credit Facilities, Debt and Other Capital General -In addition to our available cash, cash equivalents and cash provided by operations, from time to time we use borrowings to finance acquisitions, our capital expenditures and working capital needs. Credit Facility -Our amended and restated…
• EME (EMCOR Group, Inc.)
• FY2025 10-K: …growth within the majority of the sectors we serve, with the most significant increases within: (a) network and communications, predominantly as a result of several data center construction contracts, (b) institutional, largely as we continue to see demand for our services from education customers, including a number…
• FY2025 10-K: Controls and filtration systems; • Water and wastewater treatment systems; • Central plant heating and cooling systems, including manufacturing and installing sheet metal air handling systems; • Millwright services; and • Steel fabrication, erection, and welding services. The electrical and mechanical construction…
• PWR (Quanta Services, Inc.)
• FY2025 10-K: …approach for our high-quality customers. With respect to our communications service offerings, which are focused on the North American market, consumer and commercial demand for communication and data-intensive, high-bandwidth wireline and wireless services and applications are driving significant investment in…
• FY2025 10-K: …to fluctuate. Despite these fluctuations and cyclicality, we continue to selectively pursue larger pipeline project opportunities to the extent they satisfy our margin and risk profiles. Additionally, the significant increase in demand for electric power is resulting in an increase in planning for new natural gas…
• MTZ (MasTec, Inc.)
• FY2025 10-K: …new renewable and conventional energy generation resources; drives the need for substantial transmission and distribution system upgrades; and contributes to continued demand for natural gas and emerging hydrogen infrastructure. Similarly, the ongoing transition toward cleaner energy 5 sources is expected to support…
• FY2025 10-K: …wireless and wireline/fiber networks, data center buildout and interconnection, wireless integration and optimization and install-to-the-home services, as well as select utility infrastructure, among others. Our Clean Energy and Infrastructure segment primarily serves energy, utility, government and other end-markets…
• PRIM (Primoris Services Corporation)
• FY2025 10-K: …segment. ​ ​ ● Power Delivery, inspection, maintenance, and replacement of electrical utility infrastructure - We are experiencing strong tailwinds in our power delivery business due to increased demand for electricity in the United States. Electric utilities continue to invest in grid resiliency, modernization,…
• FY2025 10-K: …based on units completed. Costs to obtain contracts are generally not significant and are expensed in the period incurred. ​ The classification of revenue, gross profit, and operating income for segment reporting purposes can at times require judgment on the part of management. Our segments may perform services…
• KBR (KBR, Inc.)
• FY2025 10-K: …the backlog amounts presented above. The difference between backlog of $16.9 billion and the remaining performance obligations as defined by ASC Topic 606, Revenue from Contracts with Customers ("ASC 606") of $13.3 billion is primarily due to our proportionate share of backlog related to unconsolidated joint ventures…
• FY2025 10-K: …to MUFG of certain of our designated eligible receivables, with a significant portion of such receivables being owed by the U.S. government. We plan to continue to utilize these programs to ensure we have flexibility to meet our capital needs. Refer to Note 20. "Fair Value of Financial Instruments and Risk…

PA Consulting (reported)

• ACN (Accenture plc)
• FY2025 10-K: …approach to tax return review between taxpayers and Irish Revenue. In addition, we are negotiating a bilateral Advance Pricing Agreement ("APA") with the U.S. and Ireland that covers fiscal 2021 through fiscal 2025. We expect through this APA to gain certainty and avoid prolonged disputes on the pricing of…
• FY2025 10-K: …adjust levels of new hiring and use involuntary terminations as a means to keep our supply of skills and resources in balance with changes in client demand. In addition, we adjust compensation to provide market relevant pay based on the skills of our people and locations where we operate. We also consider a variety…
• BAH (BOOZ ALLEN HAMILTON HOLDING CORPORATION)
• FY2025 10-K: …by the federal tax authorities. The Company is currently under federal audit by the Internal Revenue Service ("IRS") for fiscal years 2016, 2017 and 2019-2021. The other jurisdictions currently open or under examination are not considered to be material. It is difficult to predict the ultimate outcome or the timing…
• FY2025 10-K: …(PCAOB), the Company's internal control over financial reporting as of March 31, 2025, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated May 23, 2025 expressed an unqualified…
• FCN (FTI CONSULTING, INC)
• FY2025 10-K: …management teams, boards of directors, law firms, governments and regulators manage change and mitigate risk surrounding transformational and disruptive events, including crises, transactions, investigations, disputes, regulation and legislation. We deliver a wide range of services centered around three core…
• FY2025 10-K: …and generating new business. Through our staff of highly qualified professionals, we can handle a large number of complex global assignments simultaneously. To attract and retain highly qualified professionals, we offer various compensation opportunities, including sign-on bonuses, incentive pay opportunities, and…
• HURN (HURON CONSULTING GROUP INC.)
• FY2025 10-K: ), enterprise resource planning ("ERP"), enterprise performance management ("EPM"), and customer relationship management ("CRM") systems; data management, AI and automation; technology managed services; and payor core F-39 Table of Contents HURON CONSULTING GROUP INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS…
• FY2025 10-K: …and specialty consulting firms; consulting divisions of our technology partners; and the internal professional resources of organizations. We compete with a large number of service and technology providers in all of our segments. Our competitors vary, depending on the particular industry and expertise area, and we…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.