Reviewing Jacobs Engineering Group (JEC) and Granite Construction (GVA)

Jacobs Engineering Group (NYSE: JEC) and Granite Construction (NYSE:GVA) are both mid-cap construction companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, risk, valuation, profitability, earnings, analyst recommendations and institutional ownership.

Dividends

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Jacobs Engineering Group pays an annual dividend of $0.60 per share and has a dividend yield of 1.0%. Granite Construction pays an annual dividend of $0.52 per share and has a dividend yield of 0.9%. Jacobs Engineering Group pays out 18.5% of its earnings in the form of a dividend. Granite Construction pays out 32.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Jacobs Engineering Group is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Jacobs Engineering Group and Granite Construction, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Jacobs Engineering Group 0 4 9 0 2.69
Granite Construction 0 1 5 0 2.83

Jacobs Engineering Group presently has a consensus price target of $73.45, suggesting a potential upside of 26.62%. Granite Construction has a consensus price target of $72.00, suggesting a potential upside of 30.22%. Given Granite Construction’s stronger consensus rating and higher possible upside, analysts plainly believe Granite Construction is more favorable than Jacobs Engineering Group.

Profitability

This table compares Jacobs Engineering Group and Granite Construction’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Jacobs Engineering Group 2.30% 8.59% 4.72%
Granite Construction 2.31% 6.97% 3.58%

Insider and Institutional Ownership

82.3% of Jacobs Engineering Group shares are owned by institutional investors. Comparatively, 96.1% of Granite Construction shares are owned by institutional investors. 0.7% of Jacobs Engineering Group shares are owned by company insiders. Comparatively, 1.3% of Granite Construction shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Risk & Volatility

Jacobs Engineering Group has a beta of 1.47, indicating that its share price is 47% more volatile than the S&P 500. Comparatively, Granite Construction has a beta of 1.32, indicating that its share price is 32% more volatile than the S&P 500.

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Jacobs Engineering Group $10.02 billion 0.82 $293.72 million $3.24 17.90
Granite Construction $2.99 billion 0.74 $69.09 million $1.62 34.13

Jacobs Engineering Group has higher revenue and earnings than Granite Construction. Jacobs Engineering Group is trading at a lower price-to-earnings ratio than Granite Construction, indicating that it is currently the more affordable of the two stocks.

Summary

Jacobs Engineering Group beats Granite Construction on 10 of the 16 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 Granite Construction

Granite Construction Incorporated operates as a heavy civil contractor and a construction materials producer in the United States. The company operates through three segments: Construction, Large Project Construction, and Construction Materials. The Construction segment undertakes various civil construction projects focusing on new construction and improvement of streets, roads, highways, bridges, site work, underground, power-related facilities, water-related facilities, utilities, and other infrastructure projects. It serves customers in the public sector, including certain federal agencies, state departments of transportation, county and city public works departments, school districts and developers, utilities, and private owners of industrial, commercial, and residential sites. The Large Project Construction segment focuses on large, complex infrastructure projects, including highways, mass transit facilities, bridges, tunnels, waterway locks and dams, pipelines, canals, power-related facilities, water-related facilities, utilities, and airport infrastructure. It also undertakes primarily bid-build, design-build, and construction management/general contractor contracts, together with various contract methods relating to public-private partnerships. The Construction Materials segment mines and processes aggregates; and produces and sells construction materials, primarily asphalt, to contractors, landscapers, manufacturers of products requiring aggregate materials, retailers, homeowners, farmers, and brokers. The company also performs site preparation and infrastructure services for residential development, energy development, commercial and industrial sites, and other facilities; and provides construction management professional services. Granite Construction Incorporated was founded in 1922 and is headquartered in Watsonville, California.

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