KBR, Inc .'s KBR government services unit, KBRwyle has signed an agreement with LIG Nex1, a Korean aerospace and defense company. This will help upgrade the Korean military's Identify Friend or Foe (IFF) capability. The IFF upgrade program is expected to start in 2019.
Per the deal, KBR's Government Services Asia-Pacific business, will deliver test and evaluation services for the upgrade of Korean military's IFF system. The move underscores the company's aim to leverage its global footprint.
In fact, KBR, a leading global engineering, construction and services company, has been supporting Army, Navy and Joint military platform and IFF capabilities in the United States under its KBRwyle unit for long.
Meanwhile, shares of KBR have gained 21%, outperforming the industry
's decline of 11.2% in a year's time. Government Services Segment - A Bright Spot
The company's Government Services segment, accounting for more than 68% of its total revenues, has been performing pretty well. The company is presently banking on strength in Government Services business to optimize its growth potential.
Per the company, in the second half of 2019, revenues from this project are expected to be booked into backlog of unfilled orders for the Government Services business. In fact, KBR's backlog level of $13.5 billion, as of Jun 30, 2018, highlights its underlying strength. About 80-85% of the backlog represents work under the Government Services segment.
During the second quarter of 2018, the company's total revenues increased 16% year over year on 11% organic growth at the Government Services business. Growth in KBR's overseas logistics and mission support programs with higher military exercise activities, increased outsourcing of sustainment activities by the military along with higher wins led to the growth.
Moreover, higher tasking for various missile defense and other military priorities in its engineering business areas, under select IDIQ contracts, led to the upside. KBR expects growth across all its key markets in the United States, U.K. and Australia.
Zacks Rank & Other Stocks to Consider
KBR currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the Construction sector are Fluor Corp. FLR , Gates Industrial Corp. plc GTES and Jacobs Engineering Group Inc. JEC . While Flour sports a Zacks Rank #1 (Strong Buy), Gates Industrial and Jacobs Engineering carry a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .
Flour has an expected earnings growth rate of 39.3% for the current year.
Gates Industrial's 2018 earnings are expected to increase 42.2%.
Jacobs has an expected earnings growth rate of 35.2% for the current year.
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