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Another Contract for KBR

Zacks Equity Research

Recently, KBR Ltd. (KBR) announced that it has received a contract by the Dos Republicas Coal Partnership to provide detailed engineering and technical assistance services for the Eagle Pass Mine near Eagle Pass, Texas. The financial details of the contract were not disclosed. The scope of the contract includes option analysis, detailed engineering for the material handling system and technical assistance during the construction phase of the project.

KBR's Minerals business unit is a leading provider of large-scale mining developments that include engineering, procurement and construction management (:EPCM) services for coal, iron ore, bulk material handling and coal processing systems.

Some of the major global contracts for KBR in the area of mining include the EPCM work on the Hope Down North and South mines in Australia, the development of housing for workers at the Rio Tinto mine sites in the remote region of Pilbara, and project risk management for the Koniambo nickel mine.

After the acquisition of Roberts & Schaefer Company, in 2010, KBR has strengthened its position in the mining and minerals sector with strong capabilities ranging from project management to port infrastructure.

During the last few quarters, a number of new contracts have been showering upon KBR. Two of them were turnaround contracts. These include a contract from a leading chemical company to perform turnaround services for its pyrolysis gasoline (pygas) unit on the US Gulf Coast and another from Suncor Energy Inc. (SU) to provide turnaround services for its refinery in Edmonton, Canada.

Given the favorable scenario, we expect the KBR stock to experience a revision and show a rising trend in the coming quarters. KBR also recently hit a 52-week high on May 22, with a price of $36.27, beating its previous high of $35.67 attained on May 15, 2013.

KBR currently has Zacks Rank #3 (Hold). Other stocks from the same sector that look promising include Michael Baker Corporation (BKR) with a Zacks Rank #1 (Strong Buy) and Harris & Harris Group, Inc. (TINY) with a Zacks Rank # 2 (Buy).

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