Jacobs' Strong Earnings and Backlog Growth Signal Undervalued Infrastructure Sector Leader

In an era where global infrastructure is under unprecedented pressure to adapt to climate resilience, digital transformation, and energy transition, Jacobs Solutions Inc. (NYSE: J) has emerged as a standout performer. The company's recent financial results and strategic realignment position it as a compelling investment opportunity for those seeking exposure to high-growth infrastructure markets. With a 14.3% year-over-year increase in total backlog to $22.7 billion, margin expansion, and raised guidance for 2025, Jacobs is demonstrating the hallmarks of a disciplined capital allocator and a resilient business model.

A Financial Engine of Growth

Jacobs' Q3 2025 results underscore its ability to convert macroeconomic tailwinds into tangible financial performance. Gross revenue rose 5.1% year-over-year to $3.0 billion, while adjusted EBITDA surged 13.5% to $314.3 million. The company's adjusted EBITDA margin now stands at 13.9%, reflecting disciplined cost control and operational efficiency. These metrics are not just numbers—they signal a business that is structurally positioned to capitalize on long-term trends.

The most striking indicator of Jacobs' strength is its backlog growth. A $22.7 billion backlog, up 14.3% year-over-year, provides a clear runway for future revenue. This backlog is weighted toward high-margin projects in advanced facilities and water infrastructure, which typically have longer durations and higher visibility. For investors, this means Jacobs is not just chasing short-term wins but building a pipeline of sustainable, cash-generating work.

Strategic Alignment with Megatrends

Jacobs' success is rooted in its alignment with three critical megatrends: data centers, energy modernization, and water infrastructure.

1. Data Centers: The Digital Backbone
   The demand for data centers is accelerating, driven by AI, cloud computing, and digital transformation. Jacobs has positioned itself as a full-solution provider, moving beyond design to end-to-end program delivery. Its partnership with NVIDIA to develop digital twin technology for AI data centers is a game-changer. These digital twins act as reference frameworks for NVIDIA's global clients, enabling optimized infrastructure design. With over 150 data center projects in the pipeline, Jacobs is capturing a significant share of this $120 billion serviceable addressable market (SAM).

2. Energy Modernization: Powering the Future
   Jacobs is a key player in the global energy transition. Its work on the Grand Coulee Modernization Program in the U.S. and the Marinus Link in Australia highlights its expertise in upgrading aging infrastructure. The company is also leading hydrogen projects, such as the East London Hydrogen Pipeline and the ARCHES Hydrogen Hub, which are critical for decarbonizing energy systems. These projects align with the $390 billion SAM in energy and power, where Jacobs reported 6% year-over-year revenue growth in Q3 2025.

3. Water Infrastructure: A Global Imperative
   Water scarcity and aging systems are driving demand for resilient solutions. Jacobs' $220 billion SAM in water and environmental services is being addressed through innovations like digital twins for wastewater treatment plants and partnerships with Palantir to reduce operational costs. The Little Miami wastewater project, set for completion in 2028, exemplifies its long-term value creation.

Capital Allocation: Shareholder-Friendly Discipline

Jacobs' financial strength is further amplified by its capital allocation strategy. In Q3 2025, the company repurchased $101 million of shares, bringing year-to-date repurchases to $653 million—exceeding 100% of free cash flow. This aggressive buyback program, paired with a $1.5 billion share repurchase authorization, signals confidence in its intrinsic value. The company also increased its quarterly dividend, reflecting its commitment to returning capital to shareholders.

Jacobs' balance sheet is a fortress, with a net leverage ratio at the low end of its 1.0–1.5x target range. This financial flexibility allows the company to invest in growth while maintaining a strong credit profile. For investors, this means Jacobs is not just a growth story but a stable, cash-generative business.

A Compelling Investment Case

Jacobs' raised 2025 guidance—adjusted EPS of $6.00–$6.10 and 5.5% revenue growth—reflects its confidence in execution. The company's long-term targets (6–8% organic revenue growth through 2029 and a 10%+ free cash flow margin by 2029) are achievable given its backlog and market positioning.

The infrastructure sector is often undervalued due to its cyclical perception, but Jacobs' focus on secular trends—digital transformation, energy transition, and water resilience—positions it as a long-term growth engine. Its ability to convert backlog into margin-accruing revenue, combined with disciplined capital returns, makes it a rare combination of growth and value.

Conclusion: A Resilient Play on Global Megatrends

Jacobs is more than a construction firm—it is a strategic enabler of the infrastructure revolution. Its backlog growth, margin expansion, and alignment with high-growth markets create a compelling case for investors. As the world invests in digital resilience, clean energy, and sustainable water systems, Jacobs is uniquely positioned to deliver outsized returns. For those seeking a durable, undervalued leader in infrastructure, Jacobs offers a rare blend of financial discipline, strategic foresight, and operational excellence.