Jacobs Solutions Inc. (J) DCF Valuation & Fundamental Primer
Jacobs Solutions Inc. (J) currently trades at $134.47 with an enterprise value of $19.17B. Our proprietary institutional model rates Jacobs Solutions Inc. at 63/100 (Grade: B · Mixed Fundamental Profile). The current market price prices in an implied 5-year revenue CAGR of 12.6% vs. historical growth of 20.0% (Substantial Margin of Safety).
Institutional fundamental teardown of Jacobs Solutions Inc. (J) covering SEC 10-K/10-Q cash flow conversion, SBC dilution friction, and Reverse-DCF valuation hurdles.
Jacobs Solutions Inc. (J) 3-Scenario DCF Valuation Range
Stress-test J's 5-year growth, target FCF margin, WACC, terminal methodology, and SBC/dilution friction in real time.
Split between 5-Year Explicit Cash Flows and Discounted Terminal Value
2D Institutional Valuation Sensitivity Heatmap
Implied share price & upside/downside spread across 25 valuation states (Current Price: $134.47).
| WACC \ Terminal | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $244.59 +82% | $260.74 +94% | $279.59 +108% | $301.87 +124% | $328.60 +144% |
| 9.3% | $218.28 +62% | $231.01 +72% | $245.62 +83% | $262.58 +95% | $282.48 +110% |
| 10.0% | $196.65 +46% | $206.89 +54% | $218.48 +62% | $231.74 +72% | $247.03 +84% |
| 10.8% | $178.56 +33% | $186.93 +39% | $196.31 +46% | $206.90 +54% | $218.96 +63% |
| 11.5% | $163.22 +21% | $170.16 +27% | $177.87 +32% | $186.48 +39% | $196.18 +46% |
Institutional Software Quality Scorecard (63/100 · Grade B)
Viable recurring software business but carries notable dilution, lower margins, or higher leverage.
Solid cash generation with minor working capital absorption
Minimal dilution friction; management compensation aligned with shareholders
Sub-par gross margins; higher cost of delivery or hardware/services mix
Moderate leverage or cash burn; monitor liquidity runway
Core Investment Strengths & Moats
- Low dilution friction: SBC is only 0.5% of revenue
Key Operational & Dilution Risks
- Lower software gross margins (24.8%), indicating higher hosting or service delivery drag
Reverse-DCF Solver: What Growth is Priced Into J?
The current share price only requires 12.6% 5-year CAGR (13.6% dilution-adjusted), well below historical growth of 20.0%. If the company maintains baseline execution, there is asymmetric upside.
Headline Reverse-DCF ignores Stock-Based Compensation (0.5% of revenue) and annual share dilution (0.1%/yr). Accounting for both requires 13.6% 5-year revenue CAGR to justify $134.47/sh on a true per-share economic cash flow basis.
Jacobs Solutions Inc. (J) 5-Year Fundamental Forecast
| Statement Line Item | TTM Audited Base | TTM | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|---|---|
| Revenue | $12.03B | $12.03B | $13.83B | $15.91B | $18.30B | $21.04B | $24.20B |
| Gross Profit | $2.98B | $2.98B | $3.43B | $3.95B | $4.54B | $5.22B | $6.00B |
| Operating Income (EBIT) | $863.6M | $863.7M | $993.3M | $1.14B | $1.31B | $1.51B | $1.74B |
| Stock-Based Compensation (SBC) | $61.0M | $61.4M | $70.6M | $81.1M | $93.3M | $107.3M | $123.4M |
| Unlevered Free Cash Flow (FCF) | $840.6M | $840.9M | $967.0M | $1.11B | $1.28B | $1.47B | $1.69B |
| SBC-Adjusted True Cash Flow | $779.7M | $779.5M | $896.5M | $1.03B | $1.19B | $1.36B | $1.57B |
Software & Cloud Services Peer Comparables & Rule of 40 Regression
Rule of 40 vs. EV / Revenue Multiple Regression
OLS Fit: EV/Rev = -15.6 + 0.54 × (Rule of 40) · R² = 78%Stocks below the gold regression line trade at a discount relative to their Rule of 40 compounding efficiency.
| Company | Ticker | Market Cap | TTM Revenue | Gross Margin | FCF Margin | Rule of 40 | SBC % Rev | EV / Rev |
|---|---|---|---|---|---|---|---|---|
| Jacobs Solutions Inc. | J | $15.97B | $12.03B | 24.8% | 7.0% | 27.0% | 0.5% | 1.4× |
| ServiceNow | NOW | $152.61B | $10.98B | 79.2% | 31.1% | 54.2% | 15.9% | 13.9× |
| Workday, Inc. | WDAY | $50.35B | $8.00B | 75.0% | 27.4% | 43.9% | 19.0% | 6.4× |
| Salesforce | CRM | $217.10B | $37.90B | 77.2% | 32.8% | 42.8% | 8.4% | 5.8× |
| Datadog | DDOG | $46.05B | $2.68B | 80.8% | 31.1% | 57.7% | 21.3% | 17.4× |
| Snowflake Inc. | SNOW | $71.79B | $3.63B | 66.5% | 25.2% | 57.7% | 40.8% | 20.0× |
| Hubspot | HUBS | $19.89B | $2.63B | 85.0% | 21.3% | 52.7% | 19.2% | 7.7× |
| Peer Cohort Median Benchmark (N=6) | 78.2% | 29.2% | 53.5% | 19.1% | 10.8× | |||
EV / Revenue Multiple Compression Stress Test
| Multiple Scenario | EV / Revenue | Implied Enterprise Value | Implied Equity Value | Implied Share Price | Delta vs Current |
|---|---|---|---|---|---|
| Current Multiple | 1.4× | $17.44B | $15.97B | $134.47 | 0.0% |
| -20% Multiple Compression | 1.2× | $13.95B | $12.48B | $105.09 | -20.0% |
| -35% Multiple Compression | 0.9× | $11.34B | $9.86B | $83.06 | -35.0% |
| Software Baseline Floor (5.0× EV/Rev) | 5.0× | $60.15B | $58.67B | $494.10 | +244.8% |
Frequently Asked Questions: Jacobs Solutions Inc. (J) Valuation
What is Jacobs Solutions Inc. (J)'s intrinsic DCF valuation and implied share price?
Based on audited SEC 10-K/10-Q filings and a 5-year 3-statement discounted cash flow (DCF) model, Jacobs Solutions Inc. (J) has a Base Case implied value of $148.98 per share (with a Bear Case of $64.23 and a Bull Case of $258.93), compared to its current price of $134.47. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.
What is Jacobs Solutions Inc. (J)'s Rule of 40 score and Free Cash Flow margin?
Jacobs Solutions Inc. achieves a Rule of 40 score of 27.0%, combining a 20.0% revenue growth run-rate with a 7.0% TTM free cash flow margin on $12.03B in trailing twelve-month revenue. In the Software & Cloud Services peer cohort, the median Rule of 40 benchmark is 53.5%.
What revenue growth rate is priced into J stock according to Reverse-DCF analysis?
At $134.47 per share (Enterprise Value of $17.44B), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 12.6%, compared to Jacobs Solutions Inc.'s historical CAGR of 20.0%. Overall market expectations are rated as "Substantial Margin of Safety".
How does Jacobs Solutions Inc. compare to Software & Cloud Services software peers?
Jacobs Solutions Inc. (J) earns an institutional Software Quality Score of 63/100 (Grade B — Mixed Fundamental Profile). Across its Software & Cloud Services peer group (NOW, WDAY, CRM, DDOG, SNOW), the cohort trades at a median EV/TTM Revenue multiple of 10.8× and a median gross margin of 78.2%.
How does Stock-Based Compensation (SBC) impact Jacobs Solutions Inc. (J)'s valuation?
Jacobs Solutions Inc. recorded $61.0M in TTM stock-based compensation (0.5% of revenue). When treating SBC as a cash-equivalent compensation expense, Jacobs Solutions Inc.'s SBC-adjusted free cash flow yield is 4.9%, scoring 25/25 on our Shareholder Dilution Friction pillar.