KBR (KBR) AI Stock Analysis

• Market Cap: $4.69B
• Dividend Yield: 1.65%
• Average Volume (3M): 1.46M
• Price to Earnings (P/E): 12.6
• Beta (1Y): 0.91
• Revenue Growth: 9.66%
• EPS Growth: 29.01%
• Country: US
• Employees: 38,000
• Sector: Industrials
• Sector Strength: 72
• Industry: Engineering & Construction
• EPS (TTM): 0.99
• Shares Outstanding: 126,466,140
• 10 Day Avg. Volume: 1,685,607
• 30 Day Avg. Volume: 1,457,782
• PEG Ratio: 0.84
• Price to Book (P/B): 3.48
• Price to Sales (P/S): 0.67
• P/FCF Ratio: 10.84
• Enterprise Value/Market Cap: 1.55
• Enterprise Value/Revenue: 0.93
• Enterprise Value/Gross Profit: 6.35
• Enterprise Value/Ebitda: 7.74
• 1Y Price Target: $50.60
• Price Target Upside: 36.31% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6
• EPS Forecast (FY): 4.06
• Revenue Forecast (FY): $8.09B

• Rating: 69 Neutral
• Price Target: $40.00 ▲(7.76% Upside)
• Action: Downgraded Date: 02/27/26
• Date: Action: Downgraded 02/27/26

The score is driven primarily by solid financial performance (improving profitability and strong free cash flow) and a constructive earnings outlook with clear FY2026 guidance and backlog momentum. These positives are tempered by high leverage and weak technical trend signals (below key moving averages with negative MACD). Valuation is supportive but not a major catalyst.

Positive Factors

Strong free cash flow and conversion

KBR generates robust free cash flow (FCF grew ~10% in 2026 and FCF tracks ~83%–92% of net income). High cash conversion funds shareholder returns, supports the planned spin and strategic M&A, and provides durable capacity to service debt or reinvest without relying on volatile project billing.

Sustained margin expansion and improving profitability

Profitability has meaningfully improved with gross margin expansion and net margin rising (net margin ~5.3% in 2026). Management targets higher-margin STS (20%+) and stable MTS (~10%+), indicating structural mix improvement and sustained earnings quality driven by tech/licensing and services.

Large backlog and deep bid pipeline provide revenue visibility

Work-under-contract covers ~63% of STS and ~82% of MTS 2026 guidance, with high repeat-customer exposure (~80%) and a multi-billion pipeline. This backlog and bid activity deliver durable revenue visibility, supporting steady utilization and margin retention across business cycles.

Negative Factors

Elevated leverage relative to peers

KBR's meaningful leverage amplifies earnings volatility in a cyclical, project-driven industry and constrains financial flexibility. Operating cash flow covers only a modest portion of total debt (~0.26–0.33), so deleveraging will require sustained FCF generation and could limit capital allocation options.

Award timing, protests and program concentration risk

Dependence on large government awards creates binary revenue outcomes: protest delays or losses can produce near-term revenue cliffs and backlog uncertainty. Concentration in mission programs increases downside if key recompetes are delayed or lost, making near-term guidance sensitive to adjudications.

Spin transition costs and ERP execution risk

Large one-time spin and IT transition expenses will consume cash and may push leverage higher in the near term. Concurrent ERP rollouts introduce execution risk; implementation issues could elevate costs or disrupt project delivery, pressuring margins and operational consistency during the structural transition.

KBR Business Overview & Revenue Model

Company Description

KBR, Inc. provides scientific, technology, and engineering solutions to governments and commercial customers worldwide. The company operates through Government Solutions and Sustainable Technology Solutions segments. The Government Solutions segment offers life-cycle support solutions to defense, intelligence, space, aviation, and other programs and missions for military and other government agencies in the United States, the United Kingdom, and Australia. Its services cover research and development, advanced prototyping, acquisition support, systems engineering, cyber analytics, space domain awareness, test and evaluation, systems integration and program management, global supply chain management, and operations readiness and support, as well as command, control, communications, computers, intelligence, surveillance, and reconnaissance services. This segment also provides various professional advisory services to deliver high-end systems engineering, systems assurance, and technology to customers across the defense, energy, and critical infrastructure sectors. The Sustainable Technology Solutions segment holds a portfolio of approximately 70 proprietary process technologies for ammonia/syngas/fertilizers, chemical/petrochemicals, clean refining, and circular process/circular economy solutions. This segment also includes advisory and consulting practices that focuses on energy transition and net-zero carbon emission consulting; and provides engineering, design, and professional services, as well as industrial solutions through KBR INSITE, a proprietary, digital, and cloud-based operations and maintenance platform that identifies opportunities for clients to achieve sustainable improvements in production, reliability, environment impact, energy efficiency, and profitability. KBR, Inc. was founded in 1998 and is headquartered in Houston, Texas.

How the Company Makes Money

KBR makes money mainly by delivering contracted services and project work to government and commercial clients, generating revenue based on the terms of each contract. In its Government Solutions business, revenue is largely driven by U.S. government and allied-government contracts for services such as logistics and base operations support, mission and IT services, engineering and technical support, and program management. These contracts commonly include reimbursable elements (where allowable costs are billed back to the customer) plus fees or margins (e.g., fixed-fee, incentive-fee, or time-and-materials/labor-hour structures), meaning KBR earns profit through negotiated fees, labor margins, and performance-based incentives while passing through certain direct costs. In its Sustainable Technology Solutions business, KBR earns revenue from (1) professional services (advisory/consulting, engineering, and technical services) and (2) project execution (EPC or EPCM-type delivery where KBR manages engineering/procurement/construction activities). Depending on project structure, revenue can be earned via fixed-price arrangements (profit tied to executing below cost and managing risk) or reimbursable/cost-plus arrangements (profit earned through negotiated fees and labor margins). A key component of this segment is KBR’s process-technology portfolio, where it can monetize proprietary technologies by licensing them to customers (often for refining, petrochemicals, ammonia, and related process applications) and by providing associated engineering design, catalysts/consumables, and technical services over the life of a plant; these technology-related fees and follow-on services can provide recurring or repeatable revenue tied to customer production assets. Across both segments, earnings are influenced by contract mix (fixed-price versus reimbursable), volume of labor and project activity, timing of project milestones, performance against cost and schedule, and the ability to win and recompete long-duration government programs and commercial frameworks. Significant partnerships or specific customer arrangements beyond these general contracting relationships are not available here and are therefore null.

KBR Financial Statement Overview

Summary

Overall fundamentals are solid: profitability and margins have improved and free cash flow is a clear strength (FCF growing and closely tracking earnings). The main offsets are elevated leverage (debt-to-equity ~1.9) and a near-term revenue slowdown (2026 revenue -3.4%), which increase risk if project conditions weaken.

Income Statement

Profitability has improved materially versus earlier years, with net income turning solidly positive after prior losses (2020 and 2023). Gross margin has steadily expanded (about 11.0% in 2021 to ~14.8% in 2026), and net margin improved to ~5.3% in 2026 from ~4.8% in 2025. The main offset is top-line momentum: revenue growth was modestly positive in 2025 but turned slightly negative in 2026 (-3.4%), suggesting a near-term growth pause despite better margins.

Balance Sheet

The company is generating strong returns for shareholders (return on equity in the mid-to-high 20% range in 2025–2026), but that is supported by meaningful leverage. Debt remains elevated relative to equity (debt-to-equity near ~1.9 in 2025–2026), and leverage has increased versus 2022 levels, which can amplify earnings volatility in a cyclical, project-driven industry. Asset levels are stable, but the balance sheet profile is more leveraged than conservative peers.

Cash Flow

Cash generation is a clear strength: operating cash flow and free cash flow stepped up in 2025 and again in 2026, with free cash flow growing ~10% in 2026. Free cash flow runs close to reported earnings (roughly 83%–92% of net income in 2025–2026), supporting earnings quality. A key watch item is that operating cash flow covers only a modest portion of total debt (roughly ~0.26–0.33), indicating debt paydown capacity exists but would take time without continued strong cash generation.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	7.79B	7.74B	6.96B	6.56B	7.34B
Gross Profit	1.15B	1.10B	977.00M	828.00M	806.00M
EBITDA	941.00M	811.00M	90.00M	508.00M	372.00M
Net Income	415.00M	375.00M	-265.00M	190.00M	27.00M
Balance Sheet
Total Assets	6.58B	6.66B	5.57B	5.57B	6.20B
Cash, Cash Equivalents and Short-Term Investments	500.00M	231.00M	304.00M	282.00M	254.00M
Total Debt	3.12B	2.85B	2.06B	1.98B	2.12B
Total Liabilities	5.07B	5.20B	4.17B	3.93B	4.52B
Stockholders Equity	1.50B	1.45B	1.38B	1.62B	1.67B
Cash Flow
Free Cash Flow	482.00M	385.00M	251.00M	325.00M	248.00M
Operating Cash Flow	524.00M	462.00M	331.00M	396.00M	278.00M
Investing Cash Flow	4.00M	-786.00M	-70.00M	40.00M	-428.00M
Financing Cash Flow	-391.00M	384.00M	-359.00M	-402.00M	87.00M

KBR Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 37.12
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KBR, the sentiment is Negative. The current price of 37.12 is below the 20-day moving average (MA) of 39.79, below the 50-day MA of 41.70, and below the 200-day MA of 44.90, indicating a bearish trend. The MACD of -1.40 indicates Positive momentum. The RSI at 32.87 is Neutral, neither overbought nor oversold. The STOCH value of 9.50 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for KBR.

KBR Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MTZ	74 Outperform	$24.04B	42.42	13.08%	―	12.99%	274.10%
PRIM	74 Outperform	$7.59B	24.39	17.49%	0.25%	21.45%	67.31%
KBR	69 Neutral	$4.69B	12.59	28.27%	1.65%	9.66%	29.01%
ACM	68 Neutral	$11.62B	42.33	19.75%	1.06%	0.21%	53.80%
J	68 Neutral	$15.31B	30.11	11.80%	0.94%	-23.00%	-61.88%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
FLR	55 Neutral	$6.55B	―	-1.14%	―	-1.81%	1228.51%