Jacobs Engineering Group Inc. (JEC) has won two contracts: one from Bechtel Marine Propulsion Corporation and the other from North Atlantic Refining Limited.

The former will provide engineering, procurement and construction services for its Expended Core Facility Recapitalization Project. The contract value was not disclosed but the project is estimated to cost in the range of $300 million to $500 million.

The latter is the three-year contract designed to provide turnaround planning and execution services to North Atlantic's Refinery in Canada. However, the contract value was not disclosed.

Jacobs' diversification across markets, geographical regions and services will also help to generate growth. Jacobs plans to expand into the emerging markets of India, China and the Middle East, which are expected to perform much better than the developed markets in the coming years.

However, Jacobs' continuous decrease in backlog since the beginning of fiscal 2010 is expected to negatively affect its top-line results in fiscal 2011. Further, the stock is cyclical in nature; therefore the sluggish economic environment, which has reduced the spending power of the clients, was the prime reason for the decrease in backlog. Large investors fear to infuse capital in these unstable market conditions.

The company also faces immense risk as it operates in a highly-competitive environment. Hence, we maintain our Neutral recommendation on the stock. The stock currently retains its Zacks #3 Rank (short-term “Hold” rating).