KBR Clinches EPCM Services Contract From JVGAS In Algeria

KBR Inc. (NYSE:KBR) recently announced that it has clinched an engineering and project management services contract from JVGAS —a joint venture of Sonatrach, Statoil (OL:STL) and BP (LON:BP). The company will provide engineering, procurement as well as construction management (EPCM) services in Algeria. Revenues related with the project will be booked as unfilled orders in Engineering and Construction (E&C) segment’s backlog as task orders are confirmed.

Per the deal, KBR will offer detail design engineering, construction management and procurement services at the major gas developments at In Salah Gas as well as in In Amenas. The company is anticipated towork over four years, in collaboration with its UK and Chennai offices along withlocal, in-country, engineering office.

Other Notable Contracts

Some other notable contracts secured by the company’s E&C segment include a contract from Sydney Desalination Plant Pty Limited and services contract by international pager products maker, International Paper Company (NYSE:IP). This apart, the business recently secured a pre-front end engineering design and project support services deals from BP as well as Front-End Engineering Design and project management services contract for Oman Liquefied Natural Gas LLC in Qalhat, Oman.

Growth Drivers

We expect KBR’s E&C segment to benefit from growing client operational expenditure. Backlog of this segment is anticipatedto improve in the second half of 2017, primarily owingto increased work in consulting areas.

Over the past six months, this Zacks Rank #3 (Hold) company has returned 25.6%, outperforming the industry’s average gain of 10.8%. The company is banking on the strength and momentum of its Government Services businesses to optimize growth potential. Further, it remains bullish aboutprospects, primarily driven by lucrative contracts from the U.S. military and the new wins on work with the U.K. Ministry of Defense.

Headwinds

However,the fact remains that KBR’s business is being affected by the uncertain global political and economical conditions. Current volatility in the oil and gas markets, with oversupply continuing to strain the prices and spending levels, will hurt the company’s projects and orders. This apart, reduced capital expenditure by key clients and currency fluctuations are fast eroding backlogs. This is most likely to hurt the operational results.

Stocks to Consider

Some better-ranked stocks from the same space include TopBuild Corp. (NYSE:BLD) , Owens Corning Inc (NYSE:OC) and Potlatch Corporation (NASDAQ:PCH) . While TopBuild sports a Zacks Rank #1 (Strong Buy), Owens Corning and Potlatch Corporation carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

TopBuild has surpassed estimates in the trailing four quarters, with an average positive earnings surprise of 10.4%.

Owens Corning has outpaced estimates in the preceding four quarters, with an average earnings surprise of 20.2%.

Potlatch Corporation has surpassed estimates thrice in the trailing four quarters, with an average positive earnings surprise of 41.2%.

Will You Make a Fortune on the Shift to Electric Cars?

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think.

See This Ticker Free >>