AECOM Technology Corp. (NYSE:ACM), Fluor Corporation (NYSE:FLR), KBR, Inc. (NYSE:KBR), and Jacobs Engineering Group Inc (NYSE:JEC) make good peers for URS. It turns out that in terms of forward earnings estimates all four companies trade at small premiums, with P/E multiples between 10 and 14. In addition, the trailing earnings multiples are generally well higher than where URS trades: Fluor and KBR actually carry trailing P/Es more than 20. So these four comparable companies are more expensive in terms of their trailing earnings and are only brought to slightly higher forward multiples by more optimistic Street expectations. With KBR and AECOM reporting a decline in revenue and net income in their most recent quarter compared to the same period in the previous fiscal year, we’d certainly avoid those two stocks, and the other two peers’ performances don’t seem to have been too much stronger than what we found at URS.
So in relative terms URS seems that it could be a good value. At a cheap trailing P/E, and with a modest growth record over the last year, we’d also say that it is attractive on an absolute basis. We would prefer to see more hedge funds getting excited about a small-cap stock but overall we would be interested in learning more about the company.
Disclosure: I own no shares of any stocks mentioned in this article.