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KBR's KBRwyle Business Nabs $133 Million Defense Contract

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KBR, Inc.’s KBR global government services business, KBRwyle, recently grabbed a contract from the U.S. Army to lend technical and engineering services to the PATRIOT missile system.

The $133-million worth contract is a task order, under which KBRwyle will provide engineering and technical analysis support to the PATRIOT missile system, as well as adjunct systems. The work under this contract will run for a period of five years and also has a six-month extension option.

KBRwyle will take care of engineering changes; modification retrofits; technical upgrades; Reliability, Availability and Maintainability (RAM) improvements; along with training development for the United States and its allies.

KBRwyle has been supporting the U.S. Department of Defense (DoD) for the PATRIOT missile system since almost four decades. Moreover, it delivers mission-critical and trusted services that aid the nation to maintain its crucial battlespace advantage.

KBR’s Government Services Biz: A Major Growth Driver

The company’s Government Services segment, accounting for more than 65% of total revenues, has been performing pretty well. The segment performed impressively in the last reported quarter, driven by organic growth and new award wins from the U.K. Ministry of Defense, U.S. Air Force and Naval Air Warfare Center Aircraft Division. The division’s revenues climbed an impressive 31.5% year over year to $677 million. Further, the company expects growth across all key markets in the United States, U.K. and Australia on account of continued opportunities across the lifecycle of its projects.

KBRwyle has been on a winning spree in the recent times. Recently, KBRwyle secured a seat on a multi-award contract by the U.S. Army Corps of Engineers Engineering Research and Development Center. Per the contract, KBRwyle has been selected as one of the six prime contractors on the $900 million indefinite-delivery, indefinite-quantity contract, under which the company is entitled to provide rapid solutions for fixing problems identified through DoD’s Joint Test and Evaluation Program.

Share Price Performance

Over the past three months, KBR’s shares have gained 6.9% against its industry’s 1% growth. Going forward, KBR expects broad-based growth in all the segments, which is expected to reflect in its share price. Primary growth drivers include high end and differentiated government services work, strong margin performance, as well as technology and consulting.


Zacks Rank & Key Picks

Currently, KBR carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same sector are Jacobs Engineering Group Inc. JEC, Aegion Corporation AEGN and Altair Engineering Inc. ALTR, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Jacobs, Aegion and Altair Engineering’s current-year earnings are expected to grow 31.5%, 34% and 3.9%, respectively.

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