Cramer sites a technician who believes that Fluor has strong support and is finished declining.  On the other hand, Jacobs Engineering is seeing significantly higher volume on the   declines than on the gains, a signal that perhaps there is more downside in store.  For an example, look at the huge volume following last week's earnings announcement from JEC.  Based on the charts, the clear choice is Fluor.

At Ockham, we focus our analysis on fundamentals and we currently see both of these stocks as Undervalued.  Cramer argues that Fluor is the better buy of the two because it is more dependent on building projects than on maintenance projects which are JEC's bread and butter.  That means, if you believe that the stimulus projects are coming down the pike then the growth aspect is more appealing for Fluor.  A new contract with China National Offshore (CEO) demonstrates Fluor's international exposure, which is far more attractive than Jacobs, especially in a weak dollar scenario.  In addition, Cramer reasons that while both stocks missed Wall Street's estimates last quarter, Fluor's miss was less dramatic.JEC

Although we have both stocks rated positively, we actually have to lean towards Jacobs Engineering as the more attractive valuation right now.  Cramer cites the historical price-earnings multiple of FLR as 18x, and at a current price-to-cash earnings of 9x it is very attractive.  However, he does not mention that JEC is even further out of favor with the market compared to this historical standard.  Jacobs normally trades at a price-to-cash earnings multiple of 20x, but is currently right with FLR at 9x.  Jacobs' revenue has fallen off by a greater percentage than Fluor during the recession, but historically speaking the growth is more attractive for JEC.  That could mean that Cramer is underestimating the boost JEC will receive as the federal stimulus does start to work into the operations of these firms.  In closing, we think both are attractively priced right now, but by our methodology we have to give the slight edge to Jacobs.