KBR, Inc. (KBR - Free Report) has received a £500-million contract from the U.K. Government's Nuclear Decommissioning Authority-owned Sellafield Ltd. to act as one of the delivery partners for the latter’s major construction projects and infrastructure program in the United Kingdom.
KBR will support safe and secure decommissioning of the Sellafield nuclear site. This framework contract, which has a total value of approximately £4.5 billion, has a duration of more than 20 years.
Per the contract, KBR will provide program and project management services, along with project-specific delivery plans for all major projects at Sellafield, including mobilization of resources, coordination of logistic requirements and interpretation of delivery strategies. Also, it will coordinate the development of an integrated management system, and procurement management, estimating, quantity surveying, risk management, document controls and commercial services.
Additionally, the company, as an integration partner, will conjugate with clients and three other Program and Project Partners to form an integrated delivery team. The team along with supply chain will improve capability, enhance project delivery, and support social value and local economic development. Also, the team will contribute to the U.K. industrial strategy and nuclear sector deal.
KBR has been supporting nuclear programs in the U.K. over the past few years. On Apr 26, 2019, the company received a support contract from the U.K. Ministry of Defence to provide communications network support and training services in the Middle East.
As of Mar 31, 2019, KBR recorded a backlog of $13.6 billion compared with $13.5 billion in the corresponding period of 2018, highlighting its underlying strength. Markedly, nearly 80% of the backlog represents work in Government Solutions. The company believes that the recent contract wins will ultimately help in margin expansion and considerably de-risking business.
Notably, shares of KBR have outperformed its industry so far this year. The stock has gained 49.5% compared with its industry’s collective growth of 19.6%. The solid performance is backed by the company’s impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in each of the trailing five quarters. First-quarter 2019 marked its 9th consecutive quarter of strong revenues, earnings and cash flow; impressive year-over-year backlog growth; and the successful integration of SGT and Aspire.
Going forward, KBR expects broad-based growth across all segments. Primary growth drivers include high-end and differentiated government business work, strong margin performance, and the technology and consulting business.
Zacks Rank & Other Key Picks
Currently, KBR carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other top-ranked stocks in the Zacks Construction sector include EMCOR Group, Inc. (EME - Free Report) , AECOM (ACM - Free Report) and Quanta Services, Inc. (PWR - Free Report) . While EMCOR sports a Zacks Rank #1, both AECOM and Quanta Services carry a Zacks Rank #2.
EMCOR and AECOM surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average being 14.5% and 6.2%, respectively.
Quanta Services’ earnings for the current year are likely to grow 28.8%.
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