JACOBS SOLUTIONS INC. (J): what the price requires
At today's price, JACOBS SOLUTIONS INC. (J) is priced for +20.6% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/J
Headline
| Field | Value |
|---|---|
| Ticker | J |
| Company | JACOBS SOLUTIONS INC. |
| Current price | $126.61/sh |
| Composition | United States 62% / Europe 24% / Canada 2% / Asia 1% / India 2% / Australia and New Zealand 5% / Middle East and Africa 5% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 2.2% |
| Operating margin today | 4.6% |
| Margin compression implied | -2.4pp |
| Implied growth | 20.6% |
| Multiple paid | 29x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 8.2% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~8.3pp.
Reconcile: at the x-ray's 9.3% required return this reads ~5.9 years; the models below use their own rates.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | +0.63σ |
| cohort percentile (of 225 peers) | 68 |
| sustained it ~5 years at this level | 37% |
| implied end-window share | 0% |
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.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 3.20x | 4 | expensive |
| Earnings | 3.65x | 5 | expensive |
| Relative | 1.74x | 5 | expensive |
| Growth | 1.13x | 3 | expensive |
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 7.2%); the inversion above states its own rate.
Per-Model Detail (n=17)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $111.82 | 1.13x | yes | FCF base $0.5B, growth 4% (input: historical growth), terminal g 4.0%, WACC 7.2%, 5yr projection |
| DCF Exit Multiple | Growth | $131.50 | 0.96x | yes | Exit EV/EBITDA: 27.1x / 29.1x / 31.1x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $72.94 | 1.74x | yes | P/E 24.28x (blended: static sector reference 18x + trailing (TTM) 39x), scenarios: 20.3x / 24.3x / 28.2x (bear / base = reference held flat / bull), EV/EBITDA 17.13x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $35.17 | 3.60x | yes | BV/sh $28.15, ROE (TTM) 11.6%, ke 9.3% |
| Two-Stage Excess Return | Asset | $39.12 | 3.24x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $105.89 | 1.20x | yes | Rev $13.2B, growth 4% (input: historical growth; tapered), Terminal P/S: 0.9x / 1.1x / 1.3x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $38.52 | 3.29x | yes | EPS $3.21, growth 1% (input: historical EPS growth), PEG=34.47 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $65.06 | 1.95x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.92B × (1−21%) / WACC 7.2% → EPV (no growth) |
| Residual Income | Asset | $39.91 | 3.17x | yes | BV $28.15 + 5yr PV of (ROE (TTM) 11.6% − Kₑ 9.3%) × BV; BV grows 7.5%/yr |
| Graham Number | Asset | $45.09 | 2.81x | yes | √(22.5 × EPS $3.21 × BVPS $28.15) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $36.23 | 3.49x | yes | EBITDA $0.62B × sector EV/EBITDA 12.0x |
| FCF Yield | Earnings | $17.46 | 7.25x | yes | FCF $484.1M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $11.47 | 11.04x | yes | SBC-adj FCF $0.42B (FCF $0.48B − SBC $0.06B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $103.58 | 1.22x | yes | EPS $3.21 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | $280.88 | 0.45x | yes | Revenue $13.17B × sector P/S 2.5x |
| PEG Fair Value | Relative | $120.38 | 1.05x | yes | EPS $3.21 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $34.70 | 3.65x | yes | EPS $3.21 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $2.7b |
| Net debt / NOPAT (after-tax) | 5.77x |
| Net debt / operating income (pre-tax) | 4.56x |
| Interest coverage | 3.9x |
| Share count CAGR (buyback) | -7.1% |
| Burning cash | no |
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)
- (no filing in the citation store)
- TTEK (TETRA TECH, INC.)
- (no filing in the citation store)
- STRL (Sterling Infrastructure, Inc.)
- (no filing in the citation store)
- EME (EMCOR Group, Inc.)
- (no filing in the citation store)
- PWR (Quanta Services, Inc.)
- (no filing in the citation store)
- MTZ (MasTec, Inc.)
- (no filing in the citation store)
- PRIM (Primoris Services Corporation)
- (no filing in the citation store)
- KBR (KBR, Inc.)
- (no filing in the citation store)
PA Consulting (reported)
- ACN (Accenture plc)
- (no filing in the citation store)
- BAH (BOOZ ALLEN HAMILTON HOLDING CORPORATION)
- (no filing in the citation store)
- FCN (FTI CONSULTING, INC)
- (no filing in the citation store)
- HURN (HURON CONSULTING GROUP INC.)
- (no filing in the citation store)
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.
- 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.
Sources
Jacobs Q2 FY2026 earnings, Dealroom / AlphaPilot, May 2026 · Jacobs Q2 FY2026 earnings, Dealroom, May 2026 · Jacobs Q2 FY2026 earnings, AOL, May 2026 · Jacobs Q2 FY2026 earnings, BigGo Finance, May 2026 · Jacobs Q2 FY2026 earnings, Dealroom / AOL, May 2026 · Jacobs Q2 FY2026 earnings, AlphaPilot, May 2026