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KBR Inc (KBR)
NYSE:KBR
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KBR
(NYSE:KBR)
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Rating:69Neutral
Price Target:
$46.00
▲(8.93% Upside)
Action:DowngradedDate: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
Free Cash Flow & Conversion
Consistent high cash conversion and growing free cash flow provide durable internal funding for debt reduction, shareholder returns and the planned spin. Strong FCF (near 83%–92% of net income historically) supports capital allocation without depending on volatile project billings.
Large Backlog & Diversified Pipeline
Substantial, multi-year backlog and high work-under-contract coverage reduce revenue volatility and support medium-term revenue visibility. Large defense IDIQ seats and repeat-customer pipeline across mission tech and STS create structural recurring revenue and protect margins through program continuity.
Higher‑value Tech, M&A & Strategic Spin
Shift toward technology-enabled, higher-margin and recurring services plus targeted M&A strengthens competitive advantage and long-term margins. Building digital/tech capabilities and scaling JV/IP positions KBR to capture structural secular demand for decarbonization, digitalization and recurring service models.
Negative Factors
Elevated Leverage
Meaningful leverage amplifies earnings volatility in a cyclical, project-driven business, increases interest expense exposure, and limits strategic flexibility. Even with solid cash generation, paying down debt will take time, constraining the firm's ability to fund large organic investments or absorb contract setbacks.
Award Timing & Protest Risk
Concentration in large, lumpy awards and ongoing protests create structural revenue and backlog uncertainty. Delays or unfavorable protest outcomes can push or remove multi‑year revenue, disrupting cash flow timing and making near-term guidance and spin planning contingent on external legal/timing outcomes.
STS End‑market Pressure & Near‑term Revenue Pause
Weakness in petrochemical capex and delayed green projects reduces bidding conversion and FEED/EPC throughput for STS, risking sustained lower top-line growth. Even with margin improvement, prolonged capex softness can compress utilization of engineering capacity and slow conversion of backlog to profitable work.
KBR (KBR) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$5.34B
Dividend Yield1.65%
Average Volume (3M)1.23M
Price to Earnings (P/E)12.1
Beta (1Y)0.86
Revenue Growth9.66%
EPS Growth29.01%
CountryUS
Employees38,000
SectorIndustrials
Sector Strength72
IndustryEngineering & Construction
Share Statistics
EPS (TTM)0.99
Shares Outstanding126,466,140
10 Day Avg. Volume1,312,496
30 Day Avg. Volume1,226,025
Financial Highlights & Ratios
PEG Ratio0.84
Price to Book (P/B)3.48
Price to Sales (P/S)0.67
P/FCF Ratio10.15
Enterprise Value/Market Cap1.44
Enterprise Value/Revenue0.99
Enterprise Value/Gross Profit6.69
Enterprise Value/Ebitda8.10
Forecast
1Y Price Target
$54.33Price Target Upside28.65% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
EPS Forecast (FY)4.05
Revenue Forecast (FY)$8.14B
KBR Business Overview & Revenue Model
Company DescriptionKBR, 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 MoneyKBR generates revenue through multiple streams, primarily from its engineering and construction services, government services, and technology solutions. The company earns money by undertaking large-scale projects for clients, where it charges for its engineering and construction expertise, often on a fixed-price or cost-plus basis. Additionally, KBR provides consulting services and operational support for various sectors, which contribute significantly to its earnings. The company's partnerships with government agencies and private enterprises allow it to secure long-term contracts, ensuring a steady flow of revenue. Key factors contributing to its earnings include its ability to leverage advanced technologies, a strong focus on sustainability, and a diverse portfolio of projects across multiple sectors.
KBR Key Performance Indicators (KPIs)
Any
Revenue by Geography
Breaks down revenue across different regions, revealing where the company is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Breaks down revenue across different regions, revealing where the company is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Data provided by:
The Fly
The FlyKBR Earnings Call Summary
Earnings Call Date:Feb 26, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 05, 2026
Earnings Call Sentiment Positive
The call emphasizes disciplined execution and improving quality of earnings despite a challenging external award environment. Key positives include margin expansion (up ~100–190 bps), strong cash conversion (110%), backlog growth (STS +5% YoY, MTS +15% YoY), a robust bids pipeline, strategic M&A (SWAT) and on-track spin preparations. Lowlights include a Q4 revenue decline (-$223M), award timing/protest risks (material awards under protest), market pressure in petrochemical and green projects, and near-term spin transition costs ($140M–$180M). Given the balance of stronger profitability, cash generation, backlog/pipeline momentum and clear 2026 guidance that offsets several the near-term headwinds, the highlights materially outweigh the lowlights and the overall tone is constructive.Q4-2025 Updates
Positive Updates
Industry-leading Safety Performance
TRIR reached an all-time low of 0.033 and Zero Harm days hit an all-time high of 96%, demonstrating strong safety culture and operational discipline.
Margin Expansion and Profitability Improvement
Adjusted EBITDA increased by $12M in Q4 and by $100M for the full year; adjusted margins rose to 12.6% in Q4 (up 190 basis points) and to 12.4% for FY2025 (up >100 basis points year-over-year).
Strong Cash Generation and Conversion
Operating cash flow was $557M for FY2025, representing 110% conversion to adjusted net income; adjusted operating cash flow guidance for 2026 is $560M–$600M.
Record Capital Returned to Shareholders and Deleveraging
Returned $413M to shareholders in 2025 (highest in a decade) and ended the year with net leverage of 2.2x, supporting disciplined capital allocation into the spin.
STS Backlog, Book-to-Bill and Pipeline Momentum
Sustainable Tech backlog ended at $4.2B (up 5% YoY and >20% excluding Plaquemines); Q4 book-to-bill was 1.6x with trailing 12-month book-to-bill 1.2x; near-term pipeline (ex-LNG) ~ $5B with ~80% repeat customers; work under contract covers ~63% of STS 2026 guidance.
Mission Tech Backlog and Bid Activity
Mission Tech backlog and options were $19.1B (up 15% YoY) with ~40% funded (ex-PFIs); bids awaiting awards totaled $17B (80% new business); expect to bid >$25B in 2026 (up double digits YoY); work under contract covers ~82% of MTS 2026 guidance.
Strategic M&A and Technology Progress
Closed SWAT acquisition (BRIS) which more than doubled that JV's EBITDA contribution; launched INSITE 3.0 venture with Applied and advanced technologies (Mura, Hydro-PRT now producing on-spec product), supporting long-term OpEx/digital growth.
Conservative, Clear 2026 Financial Guide
FY2026 consolidated guidance: revenues $7.9B–$8.36B, adjusted EBITDA $980M–$1.04B, adjusted EPS $3.87–$4.22 (midpoint implies ~4% YoY growth); assumes STS low double-digit growth at 20%+ margins and MTS low single-digit growth at 10%+ margins.
Negative Updates
Revenue Decline in Q4
Q4 revenues were $1.85B, down $223M year-over-year (primarily due to award timing in MTS and reductions in EUCOM contingency scope).
Challenging Market Environment for STS
Sharp decline in petrochemicals CapEx and a pause in many green projects as customers prioritized affordability and energy security, pressuring certain STS end markets in 2025.
Mission Tech Award Delays and Reduced Contingency Activity
MTS faced award timing delays, reduced contingency activity (notably in Europe) and impacts from the U.S. government shutdown; lost the COSMOS recompete (a lower-margin loss) and experienced some recompete/protest activity.
Protests, Pending Awards and Concentration Risk
Several material awards are under protest (e.g., Mission Iraq ~ $1B and a classified K2A program); guidance assumes resolution of protests in H1 2026, creating upside/downside risk depending on outcomes.
Near-term Transition and Spin Costs
Expected spin-related transition costs of $140M–$180M (including one-time IT capital), and leverage may trend modestly higher in H1 2026 before improving—creating near-term cash consumption.
Pressure in Science & Space and Specific Project Uncertainty
Science & Space revenues were pressured (NASA budget headwinds) and certain projects (e.g., Energy Transfer Lake Charles) were paused/cancelled, raising uncertainty about future JV contributions and project timing.
Higher Tax Rate and Interest Expense
Adjusted EPS improvement was partially offset by higher interest expense and a projected FY2026 effective tax rate of 26%–28% (up due to a greater mix of work in the Global South).
ERP/Implementation Execution Risk (managed but present)
ERP (Microsoft Dynamics) rollouts are underway across STS geographies; management highlighted disciplined execution to date, but ERP implementations historically represent execution risk during transformation.
Company Guidance
KBR provided consolidated fiscal‑2026 guidance of $7.90–$8.36 billion in revenues, $980–1,040 million of adjusted EBITDA, $3.87–4.22 adjusted EPS and $560–600 million of adjusted operating cash flow (midpoint implying ~4% y/y growth), with transition/spin costs of $140–180 million included; capital expenditures of $40–50 million; an effective tax rate of 26–28%; an estimated adjusted share count of 127 million; and a 2026 dividend of $0.66 per share ($0.165 quarterly). Management expects revenues/adjusted EPS to be ~46% H1 / 54% H2, Q1 roughly in line with Q4 ’25, and noted first‑half comps include elevated EUCOM contingency of ~$60–70 million per quarter; modeling assumptions include resolution of outstanding protests in H1, all material programs remaining in place, modest improvement in interest rates in H2 and stable FX. They also framed segment expectations: STS assumed to grow low double‑digits at normative margins of 20%+, MTS low single‑digits at 10%+ (work‑under‑contract already covers ~63% of STS’s 2026 guide and ~82% of MTS’s), and the company will introduce adjusted operating and free cash flow metrics that add back spin‑related cash outflows.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.72
Positive
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.58
Neutral
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.81
Very Positive
| 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 | 515.00M | 385.00M | 251.00M | 325.00M | 248.00M |
| Operating Cash Flow | 557.00M | 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
Positive
42.23
Price Trends
42.38
Negative
42.62
Negative
45.97
Negative
Market Momentum
-0.36
Positive
50.40
Neutral
59.61
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KBR, the sentiment is Positive. The current price of 42.23 is above the 20-day moving average (MA) of 42.02, below the 50-day MA of 42.38, and below the 200-day MA of 45.97, indicating a neutral trend. The MACD of -0.36 indicates Positive momentum. The RSI at 50.40 is Neutral, neither overbought nor oversold. The STOCH value of 59.61 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for KBR.
KBR Risk Analysis
KBR disclosed 45 risk factors in its most recent earnings report. KBR reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
KBR Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $23.51B | 58.74 | 12.93% | ― | 12.99% | 274.10% | |
74 Outperform | $8.15B | 30.05 | 17.79% | 0.25% | 21.45% | 67.31% | |
69 Neutral | $5.34B | 12.11 | 30.18% | 1.65% | 9.66% | 29.01% | |
69 Neutral | $12.67B | 22.49 | 27.11% | 1.06% | 0.21% | 53.80% | |
66 Neutral | $16.19B | 37.84 | 12.01% | 0.94% | -23.00% | -61.88% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
55 Neutral | $7.67B | -41.69 | -1.42% | ― | -1.81% | 1228.51% |
* Industrials Sector Average
KBR
KBR
42.23
-5.43
-11.39%
ACM
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97.98
1.79
1.86%
FLR
Fluor
52.31
15.39
41.68%
J
Jacobs Solutions
137.86
15.17
12.37%
MTZ
MasTec
298.02
170.35
133.43%
PRIM
Primoris Services
150.72
82.08
119.57%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.