On Aug 13, Zacks Investment Research downgraded
) to a Zacks Rank #5 (Strong Sell) from Zacks Rank #4 (Sell)
largely due to dismal second-quarter 2014 results.
Why the Downgrade?
KBR has been on a downtrend for the past few quarters. The
company missed earnings in all the four trailing quarters. Further,
it has witnessed strong downward estimate revisions after a
lackluster second-quarter 2014 earnings release on Jul 31.
KBR reported a loss of 6 cents per share in the quarter, lagging
both the Zacks Consensus Estimate of earnings of 26 cents and
prior-year quarter earnings of 61 cents a share. The company's
revenues also declined 14.9% year over year to $1,659 million,
lagging the Zacks Consensus Estimate of $1,682 million. Gross
profit plunged 80% year over year to $28 million.
The results were impacted by the continued disappointing
performance of KBR's pipe fabrication and module assembly business
based in Canada. The company also recorded revenue declines in 3 of
the 4 reporting segments.
All these factors triggered a downtrend in the Zacks Consensus
Estimate. The downward earnings estimate revisions in the last 30
days led to a 59.7% decline in the Zacks Consensus Estimate for
2014 to 31 cents, whereas for 2015, the Zacks Consensus Estimate
declined 9.2% to $1.58.
Moreover, stiff competition from other key players in the
engineering and construction industry including Fluor Corporation (
), AECOM Technology Corporation (
) and Foster Wheeler AG (
), remains a concern going forward.
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