Corporate executives and directors tend to have the most detailed and up-to-date information on their businesses. If they’re buying company stock, it’s generally a bullish development.
Here, we are going to highlight an insider purchase at Jacobs Engineering Group Inc (J:US). Jacobs is an engineering firm that serves clients in both the public and private sectors globally. It offers a broad range of professional services including consultancy, technical, scientific, and project delivery. The company is listed on the New York Stock Exchange and currently has a market capitalization of $18.5 billion.
Jacobs Engineering Group Inc: Insider Buying
Form 4 filings show that on 26 May, an Independent Director of Jacobs Engineering Group, Christopher Thompson, purchased 10,000 J shares at a price of $140.22 per share. This purchase cost the insider approximately $1.4 million and increased his holding by around 100%.
This insider transaction caught our attention for a couple of reasons. Firstly, it is a sizable transaction in monetary terms and has increased the Independent Director’s stake by a significant percentage. This suggests he is extremely confident in the company’s future prospects.
Secondly, our data shows that this is the first insider purchase in over eighteen months. This is important as it suggests that a shift in sentiment may be taking place within the company.
Upgrades Within Q2 Results
Jacobs Engineering recently raised its guidance for full-year 2021 on the back of strong second-quarter results. Revenue in the quarter grew by 3.5% year over year to $3.5 billion while adjusted EPS of $1.66 was up 19% on Q2 2020. The backlog of business yet to be completed grew by $2.3 billion to $25.6 billion which was 10% higher than a year prior. Adjusted EBITDA guidance for the year was raised to a range of $1.2 billion-$1.27 billion from $1.075 billion - $1.155 billion.
“As we look beyond fiscal 2021 we see multiple secular growth drivers and efficiency gains that are expected to support double-digit profit growth across Jacobs,” said President and CFO Kevin Berryman.
Given these strong results and positive momentum in the business, we see the recent insider purchase as bullish. The short-term and long-term outlook oozes confidence and Mr. Thompson appears to be extremely confident that the share price will continue to trend in an upward direction.