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Are Investors Undervaluing KBR Inc. (KBR) Right Now?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

KBR Inc. (KBR) is a stock many investors are watching right now. KBR is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 8.91. This compares to its industry's average Forward P/E of 10.48. KBR's Forward P/E has been as high as 16.07 and as low as 8.91, with a median of 12.54, all within the past year.

Another valuation metric that we should highlight is KBR's P/B ratio of 1.28. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.42. KBR's P/B has been as high as 3.26 and as low as 1.28, with a median of 1.72, over the past year.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. KBR has a P/S ratio of 0.46. This compares to its industry's average P/S of 0.51.

Finally, investors will want to recognize that KBR has a P/CF ratio of 3.72. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 10.02. Within the past 12 months, KBR's P/CF has been as high as 22.60 and as low as 3.72, with a median of 4.82.

Value investors will likely look at more than just these metrics, but the above data helps show that KBR Inc. Is likely undervalued currently. And when considering the strength of its earnings outlook, KBR sticks out at as one of the market's strongest value stocks.

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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.


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

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