KBR's IDIQ Contract to Boost Government Services Business

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KBR Inc. 's KBR government services business (KBRwyle) received an indefinite-delivery/indefinite-quantity (IDIQ) contract from the U.S. Naval Air Warfare Center Training Systems Division (NAWCTSD). Per the deal, the company will provide centrifuge-based training for all U.S. Navy as well as Marine Corps aircrew for five years.

KBRwyle will provide training to nearly 600 students per year. The students will get to learn physiological effects of acceleration as well as the countermeasures used in a high-G environment.

KBRwyle has been serving as a leader in human performance, and extreme aviation testing for the Department of Defense and NASA.

Other Contact Wins

In the quarter under review, KBR clinched some prestigious awards in its Government Services and Hydrocarbons Services segment. These include a $133-million task order by the U.S. Army to provide technical and engineering services to the PATRIOT missile system, and $900-million IDIQ contract for providing solutions under the Department of Defense's Joint Test and Evaluation Program. Under Hydrocarbon Services, KBR received a multi-year contract to provide engineering, procurement and construction management services to a fortune 100 chemicals manufacturer in the United States, and Mexico.

Contract Wins Continue to Bolster Share Price

Shares of KBR, a Zacks Rank #2 (Buy) company, have broadly outperformed the industry in a year's time. Its shares have surged 33.6% compared with the industry's rally of 13% in the said period, owing to ongoing contract wins, acquisition of SGT, consolidation of acquired entities in the Aspire Defense program and robust organic growth.

KBR's backlog level of $13.5 billion (as of Jun 30, 2018) highlights its underlying strength. About 80-85% of the backlog represents Government Services work. Majority of these Government Services are long-term reimbursable service annuity-type contracts that have significantly lower risks than some of the other projects. The company believes that the above factors will ultimately help in margin expansion and considerably de-risking its business.

Other Stocks to Consider

Other top-ranked stocks in the sector include Comfort Systems USA, Inc. FIX , Gates Industrial Corporation plc GTES and Jacobs Engineering Group Inc. JEC . While Comfort Systems sports a Zacks Rank #1 (Strong Buy), Gates and Jacobs both carry a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .

Comfort Systems' earnings surpassed the consensus estimate in three of the trailing four quarters, with an average positive surprise of 11.2%.

Gates Industrial's 2018 earnings are expected to increase 42.2%.

Jacobs surpassed earnings estimates in each of the trailing four quarters, resulting in an average positive surprise of 15.4%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Symbols: FIX , JEC , KBR , GTES

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