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Why Is KBR Down 10.4% Since its Last Earnings Report?
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It has been about a month since the last earnings report for KBR, Inc. (KBR - Free Report) . Shares have lost about 10.4% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is KBR due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
KBR Misses on Earnings and Revenues in Q4, Issues 18' View
KBR's reported adjusted earnings per share of 28 cents in fourth-quarter 2017, which lagged the Zacks Consensus Estimate of 30 cents by 6.7%.
However, the company’s adjusted earnings per sharecame well ahead of the loss of 59 cents, in the prior-year quarter.
For full-year 2017, the company posted adjusted earnings of $1.49 per share against a loss of 43 cents per share last year.
Inside the Headlines
Revenues were down 21.3% year over year to $937 million, which missed the consensus mark of $974 million. The top-line performance was affected by completion of diverse projects in its Engineering and Construction segment as well as completion of EPC power project’s execution phase in the Non-strategic Business segment.
At Technology & Consulting segment revenues rose 5.9% year over year to $90 million. The uptick can be primarily attributable to strong demand for its technologies as well as organic growth in consulting services for upstream projects.
Meanwhile, Government Services’ revenues charted impressive growth as the metric increased 7% to $553 million on a year-over-year basis. Revenue growth was backed by organic growth and expansion of task orders on existing U.S. Government contracts. Also, growth on existing program management projects in the U.K led to the improvement.
However, Engineering & Construction revenues continued with its weak trajectory and declined 44.7% year over year to $293 million. Completion of several projects across the segment played spoilsport.
Revenues at the Non-strategic Business segment came in at $1 million compared with $56 million in the year-ago quarter. The year-over-year decline was chiefly due to the completion of execution phases of its EPC power projects.
As of Dec 31, 2017, the company’s total backlog was $10.6 billion down 2.8% on a year-over-year basis. Of the total backlog, about $8.4 billion is booked under the Government Services segment (up 6.8% year over year) and around $1.8 billion under the Engineering & Construction segment (down 35.4% year over year). While Technology and Consulting accounted for $419 million of the backlog (up 34% year over year), non-strategic Business had $6 million in backlog (down 82.8%).
Major Contract Wins
In the fourth quarter, KBR’s Engineering & Construction segment clinched some prestigious awards. These include two separate FEED contracts for a new production, drilling, quarters platform — the Azeri Central East platform to be located in Azerbaijan and a multiple-year master engineering services contract from Covestro.
Additionally, the company’s Technology & Consulting segment secured a contract from Indorama Eleme Fertilizer & Chemicals Limited and Toyo Engineering Corporation for the Train 2 ammonia plant, located in Nigeria.
Liquidity & Cash Flow
As of Dec 31, 2017, KBR’s cash and equivalents were $439 million, down from $536 million as of Dec 31, 2016.
In the quarter under review, cash flow generated from operating activities came in at $193 million, up from $61 million in the year-ago quarter.
Guidance
Concurrent with the earnings release, KBR provided its guidance for full-year 2018. The company projects earnings per share within $1.35-$1.45, excluding legal costs associated with the legacy U.S. government contracts.
Also, the company expects to incur legal costs of around $10 million or 7 cents per share in the current year. This estimated legacy legal fees exclude any future cost reimbursement from the U.S. Government.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter. In the past month, the consensus estimate has shifted by 18% due to these changes.
At this time, KBR has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for value investors than those looking for growth and momentum.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, KBR has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is KBR Down 10.4% Since its Last Earnings Report?
It has been about a month since the last earnings report for KBR, Inc. (KBR - Free Report) . Shares have lost about 10.4% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is KBR due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
KBR Misses on Earnings and Revenues in Q4, Issues 18' View
KBR's reported adjusted earnings per share of 28 cents in fourth-quarter 2017, which lagged the Zacks Consensus Estimate of 30 cents by 6.7%.
However, the company’s adjusted earnings per sharecame well ahead of the loss of 59 cents, in the prior-year quarter.
For full-year 2017, the company posted adjusted earnings of $1.49 per share against a loss of 43 cents per share last year.
Inside the Headlines
Revenues were down 21.3% year over year to $937 million, which missed the consensus mark of $974 million. The top-line performance was affected by completion of diverse projects in its Engineering and Construction segment as well as completion of EPC power project’s execution phase in the Non-strategic Business segment.
At Technology & Consulting segment revenues rose 5.9% year over year to $90 million. The uptick can be primarily attributable to strong demand for its technologies as well as organic growth in consulting services for upstream projects.
Meanwhile, Government Services’ revenues charted impressive growth as the metric increased 7% to $553 million on a year-over-year basis. Revenue growth was backed by organic growth and expansion of task orders on existing U.S. Government contracts. Also, growth on existing program management projects in the U.K led to the improvement.
However, Engineering & Construction revenues continued with its weak trajectory and declined 44.7% year over year to $293 million. Completion of several projects across the segment played spoilsport.
Revenues at the Non-strategic Business segment came in at $1 million compared with $56 million in the year-ago quarter. The year-over-year decline was chiefly due to the completion of execution phases of its EPC power projects.
As of Dec 31, 2017, the company’s total backlog was $10.6 billion down 2.8% on a year-over-year basis. Of the total backlog, about $8.4 billion is booked under the Government Services segment (up 6.8% year over year) and around $1.8 billion under the Engineering & Construction segment (down 35.4% year over year). While Technology and Consulting accounted for $419 million of the backlog (up 34% year over year), non-strategic Business had $6 million in backlog (down 82.8%).
Major Contract Wins
In the fourth quarter, KBR’s Engineering & Construction segment clinched some prestigious awards. These include two separate FEED contracts for a new production, drilling, quarters platform — the Azeri Central East platform to be located in Azerbaijan and a multiple-year master engineering services contract from Covestro.
Additionally, the company’s Technology & Consulting segment secured a contract from Indorama Eleme Fertilizer & Chemicals Limited and Toyo Engineering Corporation for the Train 2 ammonia plant, located in Nigeria.
Liquidity & Cash Flow
As of Dec 31, 2017, KBR’s cash and equivalents were $439 million, down from $536 million as of Dec 31, 2016.
In the quarter under review, cash flow generated from operating activities came in at $193 million, up from $61 million in the year-ago quarter.
Guidance
Concurrent with the earnings release, KBR provided its guidance for full-year 2018. The company projects earnings per share within $1.35-$1.45, excluding legal costs associated with the legacy U.S. government contracts.
Also, the company expects to incur legal costs of around $10 million or 7 cents per share in the current year. This estimated legacy legal fees exclude any future cost reimbursement from the U.S. Government.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter. In the past month, the consensus estimate has shifted by 18% due to these changes.
KBR, Inc. Price and Consensus
KBR, Inc. Price and Consensus | KBR, Inc. Quote
VGM Scores
At this time, KBR has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for value investors than those looking for growth and momentum.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, KBR has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.