KBR Inc. (KBR) and three other firms recently received an $800-million five-year contract from the U.S. Navy. The contract was awarded under the Global Contingency Construction Multiple Award Contract and its scope includes civilian construction contract capability during any natural disaster. KBR and the other three firms are required to provide humanitarian assistance and deal with conflict situations or assist in projects of similar nature.
The project will be included in the company’s Government, Infrastructure and Power segment, which has a legacy of contingency construction and support operations for the Department of Defense and other Federal Agencies across the world. This segment reported a 20% decline in revenues in the latest reported quarter. However, it witnessed a rise in job income from the North American Government and Logistics (:NAGL) and International Government, Defence and Support Services (:IGDSS).
As per the current contract, KBR and the other three firms will be required to construct an airfield runway and/or repair, pier and waterfront construction and repair, electrical power plants and distribution systems, water treatment plants, bridges, warehouse facilities, medical clinics and fencing.
Prior to this, in May 2013, KBR’s joint venture with CH2M Hill was awarded a contract worth $17.9 million under the Air Force Contract Augmentation Program (:AFCAP). According to the terms of the agreement, the joint venture will be responsible for operating and maintaining power plants at Al Udeid Air Base, Qatar, for the U.S. Air Force.
Although KBR currently has a Zacks Rank #3 (Hold), we expect the stock to experience an upward revision and show a rising trend in the coming quarters backed by the favorable scenario.
Other stocks from the same sector that look promising include Michael Baker Corporation (BKR) with a Zacks Rank #1 (Strong Buy), while VSE Corp. (VSEC) and AO Smith Corp. (AOS) carry a Zacks Rank #2 (Buy).
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