Jacobs Solutions: Building Tomorrow's Defense Infrastructure Today – A Long-Term Growth Play

The aerospace and defense sector is undergoing a renaissance, driven by global geopolitical tensions, modernization of military hardware, and the push for sustainable manufacturing. At the heart of this transformation is Jacobs Solutions, a global engineering firm that has positioned itself as a critical partner for complex infrastructure projects. Its involvement in Boeing's $multi-billion St. Louis expansion project exemplifies its strategic dominance in defense infrastructure and sustainable manufacturing – sectors primed for decades of growth.

The St. Louis Project: A Blueprint for Defense Modernization

Boeing's St. Louis campus expansion, led by Jacobs, is a landmark initiative to nearly double Boeing's regional manufacturing footprint. The project includes a 1.1-million-square-foot facility dedicated to advanced aircraft assembly and post-assembly operations, alongside classified areas for cutting-edge defense technologies like the F-47 fighter jet. Construction is set to span 2026–2030, with phased rollouts ensuring steady revenue streams for Jacobs.

Jacobs' role extends beyond construction: it includes environmental compliance, NEPA regulatory acceleration, and lifecycle management of facilities. Notably, the firm navigated the NEPA process in just eight months – a feat underscoring its expertise in navigating complex regulations for defense projects. This capability is increasingly valuable as governments worldwide prioritize environmental oversight while accelerating national security infrastructure.

Why Jacobs' Expertise Matters

1. Defense Infrastructure Tailwinds:
   Global defense spending is projected to grow at ~3% annually through 2030, fueled by U.S. allies' modernization programs and China's military expansion. Jacobs' track record with the Navy, Air Force, and Fermilab (e.g., Fermilab's DUNE Near Site) positions it as a trusted partner for classified and high-tech projects. The St. Louis expansion, tied to Boeing's NGAD (Next Generation Air Dominance) program, is a direct play on this trend.

2. Recurring Revenue via Multi-Phase Projects:
   The St. Louis timeline (2026–2030) ensures predictable revenue as Jacobs delivers design, engineering, and construction phases. This model aligns with its $22.2 billion backlog (up 20% YoY), which includes long-term contracts with U.S. defense agencies and private aerospace firms.

3. ESG Synergies:
   The project's emphasis on sustainable facilities – including energy-efficient designs and environmental remediation – taps into ESG-driven investment trends. Missouri's $37 million in incentives (via programs like BUILD) further signals government support for green infrastructure.

Financial Fortitude and Investment Catalysts

Jacobs' Q2 2025 results highlight its financial resilience:
- Adjusted EPS rose 26% YoY to $1.43, driven by strong performance in Infrastructure & Advanced Facilities (I&AF) and PA Consulting.
- Backlog growth (now $22.2B) reflects its ability to win high-margin defense and energy contracts.

While shares have lagged the broader market in recent quarters, the St. Louis project's multi-year timeline and backlog growth suggest undervaluation. Analysts note a 13.8–14.0% EBITDA margin target for FY2025, underscoring profitability.

Investment Thesis: Buy Now for Long-Term Gains

Jacobs is a buy for investors seeking exposure to defense modernization and sustainable manufacturing. Key catalysts ahead include:
- Phased St. Louis milestones: Each completed phase will boost confidence in Jacobs' execution and backlog visibility.
- ESG-linked contracts: As governments prioritize green infrastructure, Jacobs' environmental expertise will attract new clients.
- Defense spending tailwinds: U.S. allies' modernization and hypersonic weapons programs will drive demand for Jacobs' critical infrastructure services.

Risks and Considerations

• Geopolitical volatility: Prolonged trade disputes or defense budget cuts could delay projects.
• Execution risks: Complex projects like the St. Louis expansion require flawless execution to avoid cost overruns.

Conclusion

Jacobs Solutions is uniquely positioned to capitalize on two megatrends: defense infrastructure modernization and sustainable manufacturing growth. Its role in Boeing's St. Louis project is a microcosm of its broader strategy – delivering complex, mission-critical infrastructure while aligning with ESG priorities. With a robust backlog, strong margins, and a multi-year project pipeline, Jacobs offers a compelling long-term growth opportunity. Investors should consider adding to positions now, as the firm is set to benefit from years of steady demand in its core markets.

Recommendation: Buy Jacobs Solutions (NYSE:J) for a portfolio allocation targeting infrastructure and defense sector exposure.

Data as of June 2025. Past performance is not indicative of future results. Consult a financial advisor before making investment decisions.