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KBR Wins $49-Million Recompete to Assist The U.S. Air Force

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KBR, Inc. (KBR - Free Report) has been awarded a $49-million recompete by the U.S. Air Force's 774th Enterprise Sourcing Squadron. The cost-plus-fixed-fee task order was allotted through the Department of Defense Information Analysis Center's (DoD IAC) multiple-award contract vehicle.

This contract will enhance and support the Defense Technical Information Center repository, and the research and development (R&D) and science and technology (S&T) communities. Notably, KBR has been supporting the DoD IAC since 2005. Earlier this year, the company secured a $41-million recompete contract to develop recommendations and deliver high-end technical services to PEO Aviation. Nonetheless, with this collaboration, the company looks forward to aiding the U.S. Army in meeting current and future technological needs.

Under the five-year contract, KBR will provide system acquisition support and reliability improvements on the CH-47 Chinook Helicopter and other select aircraft for the Cargo Helicopter Project Management Office within the U.S. Army's Program Executive Office Aviation. It will also provide research, development, testing, studies, analysis and recommendations to the Army project offices and their international partners. KBR will primarily perform the contract work in Huntsville, AL.

Meanwhile, Byron Bright, KBR President, Government Solutions, stated, "These wins are a product of KBR's decades of expertise in systems engineering and innovative warfighter solutions for manned and unmanned aircraft. We take great pride in aiding the U.S. military with our mission-critical services."

Increased Focus on Government Business Bodes Well

The company’s Government Solutions unit has been performing pretty well. Presently, KBR is banking on the strength of the said business to optimize its growth potential. The performance of the particular business is exceeding the market’s expectation, which is adding to KBR’s bliss.

The Government Solutions business has been banking on on-contract growth in logistics and engineering, take-away wins, alongside new work awarded under the company’s portfolio of well-positioned contracting vehicles. Strength in KBR’s overseas logistics and mission support programs, on the back of higher military exercise activities, increased outsourcing of sustainment activities by the military and the ramping up of the new wins, led to the growth.

Going forward, KBR expects growth across all its key markets in the United States, the U.K. and Australia, driven by continued opportunities across the lifecycle of projects.

Price Performance

So far this year, shares of KBR have declined 4.4% against the industry’s growth of 7.8%. Notably, the company’s operations have been negatively impacted by intense competition, the volatility of commodity prices and uncertain global political and economic conditions. However, increased focus on contract wins, strong project execution and a solid backlog level are likely to aid the company, going forward. Also, earnings estimates for 2021 have moved up over the past 60 days, depicting analysts’ optimism regarding the stock’s growth potential.

Zacks Rank & Key Picks

KBR currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the same space include Altair Engineering Inc. (ALTR - Free Report) , ChampionX Corporation (CHX - Free Report) and Gates Industrial Corporation plc (GTES - Free Report) , each carrying a Zacks Rank #2 (Buy).

Altair Engineering has a trailing four-quarter earnings surprise of 35.7%, on average.

Earnings in 2021 for ChampionX and Gates Industrial are expected to increase 341.7% and 21.6%, respectively.

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