Jacobs Solutions Inc. J
Verdict: Sell. Fair value $118 against a price of $139 on 6 Jan 2026, 15% below the price.
In plain words
The case for: Narrow competitive moat provides durability. Industry tailwinds with growing market.
The case against: Intense competitive pressure could compress margins. Net Income collapsed by 64% from $0.81B in 2024 to $0.29B in 2025. This dramatic drop, far.... Operating Cash Flow declined 34% from $1.05B in 2024 to $0.69B in 2025, while revenue grew 4.6%....
Main risks
- Collapsing Profitability: Net margin plummeted from 7.0% in 2024 to 2.4% in the TTM period, with Net Income falling 64% YoY despite revenue growth. This is a major red flag.
- Weak Capital Efficiency: ROE (8.0%), ROIC (7.5%), and an estimated ROIIC (9.4%) are all low, indicating the company is not generating adequate returns on its capital base. The ROIIC below 10% suggests questionable capital allocation.
- Deteriorating Cash Flow: Free Cash Flow dropped 34% from $0.93B in 2024 to $0.61B in the TTM period, mirroring the decline in net income and signaling potential operational issues or weakening working capital management.
- Net Income collapsed by 64% from $0.81B in 2024 to $0.29B in 2025. This dramatic drop, far...
- Operating Cash Flow declined 34% from $1.05B in 2024 to $0.69B in 2025, while revenue grew 4.6%...
- Intense competitive environment