KBR Rides on Solid Backlog & Government Services Business
KBR, Inc. KBR is experiencing widespread growth in its various business segments, driven by its high-quality and distinctive government contracts, robust margin performance, and expertise in technology and consulting services.
The expanding portfolio of long-term, essential programs ensures a stable outlook even in turbulent economic conditions, offering strong visibility for the company's future prospects.
Also, this engineering, construction and services firm’s determination to lower emissions, product diversification, energy efficiency, and more sustainable technologies and solutions bode well.
Let’s Delve Deeper and Find Out the Factors That Should Drive Growth Further
Solid Backlog Level
KBR’s solid backlog and option level of $21.1 billion (as of Jun 30, 2023) highlight its underlying strength. In second-quarter 2023, KBR received $2.2 billion in bookings and options in highly strategic areas with a trailing 12-month book-to-bill of 1.1x.
Government Solutions Business – Growth Driver
As of Jun 30, 2023, nearly 70% of the backlog represents work in the Government Solutions (GS) unit (which accounted for 81% of 2022 revenues). This notable increase is primarily due to the favorable defense, space, and military budgets, which have driven higher demand for the company's GS services. It's important to note that the majority of these projects are long-term reimbursable service contracts with annuity-like characteristics, significantly reducing the inherent risks compared to some other projects. The company anticipates that this shift will ultimately lead to expanded profit margins and a substantial reduction in overall business risk.
Robust Technology Support
For more than five decades, KBR has been leading the process technology development, commercialization and plant design solutions industry. Its best-in-class technologies have been designing and building end-to-end sophisticated digitization solutions and services for clients worldwide.
Overall, KBR, as well as other construction companies like Fluor Corporation FLR, Quanta Services, Inc. PWR and EMCOR Group, Inc. EME, are expected to benefit from their focus on lowering carbon emissions, product diversification, energy efficiency, and more sustainable technologies and solutions.
These digitized technologies and solutions help companies increase efficiency and productivity, reduce costs and create opportunities to generate higher revenues and profitability.
A Brief Discussion on the Above-Mentioned Stocks
Fluor has been gaining from its focus on the "Building a Better Future" strategy, in addition to benefiting from the infrastructural initiatives of the U.S. administration and a diversified business portfolio.
Quanta Services remains uniquely positioned to capitalize on megatrends and opportunities to lead the energy transition and enable technological development, with initiatives such as electric vehicle charging infrastructure and undergrounding of electrical infrastructure gaining momentum. More demand for infrastructure solutions that help support customers' energy-transition initiatives and modernization will continue to provide multi-year growth opportunities for Quanta.
EMCOR Group is reaping the rewards of sustained growth across its various sectors, spanning from the network communications and data center industries as well as from robust demand in healthcare and high-tech manufacturing. The company is benefiting from increased demand for the renewable energy drive across the country.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Quanta Services, Inc. (PWR) : Free Stock Analysis Report
Fluor Corporation (FLR) : Free Stock Analysis Report
KBR, Inc. (KBR) : Free Stock Analysis Report
EMCOR Group, Inc. (EME) : Free Stock Analysis Report
