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KBR's Subsidiary Wins Life Extension Study Deal from BSEE

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Premium professional services and technologies provider, KBR, Inc. (KBR - Free Report) recently announced that its subsidiary, Energo Engineering, has clinched a guidance study contract from the United States Bureau of Safety & Environmental Enforcement (BSEE). Per the contract, Energo will address integrity management of Tension Leg Platforms (TLPs) in the U.S. Gulf of Mexico. The overall value of the deal has not been disclosed.

The Deal

Per the deal, Energo will focus on four major areas of integrity management of TLP tendons which include Tendon Integrity Management, Tendon Life Extension, Understanding the "Uninspectable" Tendon Components and Fatigue of "Uninspectable" Tendon Components.

The company will collaborate with BSEE in building the framework for assessments of tendon performance as well as expectations for tendon integrity management.

Other Notable Contract Wins

KBR has been on an award-winning spree in recent times. Some other notable contracts secured include a contract from Sydney Desalination Plant Pty Limited and services contract by international pager products maker, International Paper Company (IP).

This apart, the company clinched an engineering and project management services contract by JVGAS and another contract worth $441 million for base operations support services by NAVFAC Atlantic. Such portfolio of smaller projects, services, program management and maintenance contracts gives the company a stronger foundation for long-term growth.

Existing Business Scenario

Currently, KBR is optimistic about the prospects of its Government Services businesses, primarily driven by lucrative contracts from the U.S. military and the new work wins from the UK Ministry of Defense. Moreover, KBR anticipates steady growth for its Technology & Consulting segment and remains bullish about the growing client operational expenditure, which is set to benefit its Engineering and Construction segment.

Further, the company expects growth across all its key markets in the United States, UK and Australia, driven by continued opportunities across the lifecycle of projects.

Unsurprisingly, this Zacks Rank #3 (Hold) company has returned 21.6% in the past six months, outperforming the industry’s average gain of 13.6%.

However, the fact remains that uncertain global political and economical conditions are likely to affect the company’s performance. Current volatility in the oil and gas markets, along with oversupply which is straining prices and spending levels, will hurt the company’s projects and orders. This apart, reduced capital expenditure by key clients and currency fluctuations are adversely affecting backlogs.

Stocks to Consider

Some better-ranked stocks from the same space include Thor Industries, Inc. (THO - Free Report) , Owens Corning Inc (OC - Free Report) and Potlatch Corporation (PCH - Free Report) . While Thor Industries sports a Zacks Rank #1 (Strong Buy), Owens Corning and Potlatch Corporation carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Thor Industries has surpassed estimates thrice in the trailing four quarters, with an average positive earnings surprise of 11.9%.

Owens Corning has outpaced estimates in the preceding four quarters, with an average earnings surprise of 20.2%.

Potlatch Corporation has surpassed estimates thrice in the trailing four quarters, with an average positive earnings surprise of 41.2%.

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