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KBR (KBR) Down 3.1% Since Last Earnings Report: Can It Rebound?
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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 3.1% in that time frame, underperforming the S&P 500.
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 its most recent earnings report in order to get a better handle on the important catalysts.
KBR's Earnings Beat, Revenues Fall Short of Estimates in Q4
KBR, Inc. reported impressive results for fourth-quarter 2020, wherein earnings topped the Zacks Consensus Estimate. Also, earnings and revenues increased year over year.
During the quarter, the company completed the acquisition of Centauri, accelerating growth in critical national security missions and strengthening its position as a provider of high-end, digitally-enabled solutions as well as technologies in attractive end markets.
Inside the Headline Numbers
Adjusted earnings of 51 cents per share surpassed the consensus estimate of 48 cents by 6.3%. The reported figure increased 10.9% from 46 cents per share reported a year ago.
Total revenues improved 1% year over year to $1,466 million. However, the top line missed the consensus estimate of $1,509 million by 2.8%.
Adjusted EBITDA increased 15.4% year over year to $135 million in the quarter. Adjusted EBITDA margin improved 110 bps (basis points) on year over year to 9.2%.
Segmental Details
Revenues in the Government Solutions segment inched up 14.4% year over year to $1,074 million. The upside is attributable to solid space and defense systems engineering businesses. Adjusted EBITDA margin of 9.3% contracted 160 bps year over year.
Technology Solutions' revenues decreased 23.7% year over year to $71 million due to higher concentration of license mix. That said, adjusted EBITDA margin contracted to 26.8% from 31.2% a year ago.
Energy Solutions' revenues decreased 23.6% year over year to $321 million. That said, adjusted EBITDA margin of 5.3% increased 220 bps from the year-ago level on cost-control measures.
Backlog
As of Dec 31, 2020, total backlog came in at $15.12 billion compared with $14.64 billion at 2019-end. Of the total backlog, Government Solutions booked $12.53 billion. Technology Solutions and Energy Solutions segments accounted for $704 million and $1.89 billion of the total backlog, respectively.
Government and Technology Solution units had a book-to-bill ratio of 1.2 and 1.4, respectively, excluding the impact of long-term privately-financed initiatives or PFIs.
Financials
As of Dec 31, 2020, KBR’s cash and cash equivalents were $436 million, down from $712 million at 2019-end. Long-term debt was $1.58 billion versus $1.18 billion at 2019-end.
For 2020, cash provided by operating activities totaled $367 million compared with $256 million in 2019. Adjusted operating cash flow was $290 million, up from $256 million a year ago.
2020 Highlights
Total revenues in 2020 came in at $5,767 million compared with $5,639 million in 2019, showing a 2.3% increase.
Adjusted EBITDA increased 1.5% to $478 million in 2020, mainly on revenue growth.
Earnings per share grew 2.4% year over year to $1.73.
2021 Guidance
For 2021, the company expects total revenues in the range of $5.8-$6.2 billion and an adjusted EBITDA margin of 9%. Also, it expects effective tax rate between 25% and 26% and adjusted earnings per share in the band of $2.00-$2.20.
Meanwhile, operating cash flow is projected in the range of $250-$290 million, while adjusted operating cash flow is estimated between $280 million and $320 million.
Meanwhile, for 2021, KBR updated the names of its businesses to Government Solutions (that comprises four business units, namely, Defense & Intel, Science & Space, and Readiness & Sustainment), and Sustainable Technology Solutions (formerly called Technology Solutions) to better reflect its business portfolio of advanced technologies.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
VGM Scores
Currently, KBR has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
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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KBR (KBR) Down 3.1% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for KBR Inc. (KBR - Free Report) . Shares have lost about 3.1% in that time frame, underperforming the S&P 500.
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 its most recent earnings report in order to get a better handle on the important catalysts.
KBR's Earnings Beat, Revenues Fall Short of Estimates in Q4
KBR, Inc. reported impressive results for fourth-quarter 2020, wherein earnings topped the Zacks Consensus Estimate. Also, earnings and revenues increased year over year.
During the quarter, the company completed the acquisition of Centauri, accelerating growth in critical national security missions and strengthening its position as a provider of high-end, digitally-enabled solutions as well as technologies in attractive end markets.
Inside the Headline Numbers
Adjusted earnings of 51 cents per share surpassed the consensus estimate of 48 cents by 6.3%. The reported figure increased 10.9% from 46 cents per share reported a year ago.
Total revenues improved 1% year over year to $1,466 million. However, the top line missed the consensus estimate of $1,509 million by 2.8%.
Adjusted EBITDA increased 15.4% year over year to $135 million in the quarter. Adjusted EBITDA margin improved 110 bps (basis points) on year over year to 9.2%.
Segmental Details
Revenues in the Government Solutions segment inched up 14.4% year over year to $1,074 million. The upside is attributable to solid space and defense systems engineering businesses. Adjusted EBITDA margin of 9.3% contracted 160 bps year over year.
Technology Solutions' revenues decreased 23.7% year over year to $71 million due to higher concentration of license mix. That said, adjusted EBITDA margin contracted to 26.8% from 31.2% a year ago.
Energy Solutions' revenues decreased 23.6% year over year to $321 million. That said, adjusted EBITDA margin of 5.3% increased 220 bps from the year-ago level on cost-control measures.
Backlog
As of Dec 31, 2020, total backlog came in at $15.12 billion compared with $14.64 billion at 2019-end. Of the total backlog, Government Solutions booked $12.53 billion. Technology Solutions and Energy Solutions segments accounted for $704 million and $1.89 billion of the total backlog, respectively.
Government and Technology Solution units had a book-to-bill ratio of 1.2 and 1.4, respectively, excluding the impact of long-term privately-financed initiatives or PFIs.
Financials
As of Dec 31, 2020, KBR’s cash and cash equivalents were $436 million, down from $712 million at 2019-end. Long-term debt was $1.58 billion versus $1.18 billion at 2019-end.
For 2020, cash provided by operating activities totaled $367 million compared with $256 million in 2019. Adjusted operating cash flow was $290 million, up from $256 million a year ago.
2020 Highlights
Total revenues in 2020 came in at $5,767 million compared with $5,639 million in 2019, showing a 2.3% increase.
Adjusted EBITDA increased 1.5% to $478 million in 2020, mainly on revenue growth.
Earnings per share grew 2.4% year over year to $1.73.
2021 Guidance
For 2021, the company expects total revenues in the range of $5.8-$6.2 billion and an adjusted EBITDA margin of 9%. Also, it expects effective tax rate between 25% and 26% and adjusted earnings per share in the band of $2.00-$2.20.
Meanwhile, operating cash flow is projected in the range of $250-$290 million, while adjusted operating cash flow is estimated between $280 million and $320 million.
Meanwhile, for 2021, KBR updated the names of its businesses to Government Solutions (that comprises four business units, namely, Defense & Intel, Science & Space, and Readiness & Sustainment), and Sustainable Technology Solutions (formerly called Technology Solutions) to better reflect its business portfolio of advanced technologies.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
VGM Scores
Currently, KBR has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
KBR has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.