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Analyst Blog

KBR, Inc. (KBR) hit a new 52-week high on May 15, with a price of $32.82, beating its previous high of $32.65 attained on March 28, 2013. Total number of shares traded on that date was 2,197,411 as compared to 3-month average trade volume of 1,292,950. KBR shares are currently trading at $32.80 as of closing on May 15, reflecting a year-to-date return of 4.3%.

Shares of this leading global engineering, construction and services company have been constantly demonstrating an upward trend for the last one month. This movement, however, is subject to a cyclical trend in prices which can be observed over the last one-year period.

Factors to consider

KBR recently reported first quarter 2013 earnings of 59 cents a share, beating the Zacks Consensus Estimate of 47 cents by 28.6%. However, quarterly earnings were down 3.3% year over year. Profits in the last reported quarter were impacted by projects that the company is executing since the past quarter. The company has a positive earnings growth expectation. In the trailing four quarters, KBR also reported an average earnings surprise of 56.85%.

The company recently received a number of new orders. These include a contract from the London Mayor’s Office for Policing and Crime to provide facilities management integrator services to the Metropolitan Police Service; and a turnaround services contract for the pyrolysis gasoline (pygas) unit on the US Gulf Coast by a chemical unit in Australia for a road and rail project. With this steady inflow of new orders, the company is expected to report a growth in revenue and margins in the long term.

The company’s current valuations also look attractive; it has a forward PE ratio of 11.84 compared to 15.30 for the S&P 500. This makes the stock under priced at current level. KBR currently has a market cap of $4.71 billion.

Other Stock to Consider

KBR currently has Zacks Rank #3 (Hold). Other stocks from the same sector that look promising include Michael Baker Corporation with a Zacks Rank #1 (Strong Buy), while Harris & Harris Group, Inc. and Quanta Services, Inc. (PWR - Analyst Report) have Zacks Rank # 2 (Buy) each.

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