KBR's Government Services To Offer Logistics

KBR Inc. (NYSE:KBR) recently announced that its government services business has secured a contract modification from the U.S. Marine Corps (USMC). Per the deal, KBR will offer prepositioning and logistics support services for the USMC Blount Island Command. Estimated revenues related to the contract modification will be booked as unfilled orders in the Government Services Business Segment backlog.

Notably, this latest modification deal marks the ninth year of the contract that was initially signed in 2009. It was awarded in two parts, with the first one in September 2017 as an undefinitized contract action and the second one in April 2018.

Per the contract, the company will continue offering logistics services, including inventory management, IT support, supply support, organic support, preservation and packaging as well as shipping and receiving. KBR is likely to perform the work mainly in Jacksonville, FL. Also, it will support the USMC at several other places, including Norway and Kuwait.

Existing Business Scenario

Presently, KBR is banking on the strength of its Government Services businesses to optimize its growth potential. In the first quarter of 2018, this segment delivered an impressive performance driven by organic growth and new award wins from the U.K. Ministry of Defence, the U.S. Air Force and the Naval Air Warfare Center Aircraft Division.

Moreover, the company expects growth across all its key markets in the United States, the U.K. and Australia backed by continued opportunities across the lifecycle of projects. Investments undertaken in refining and petrochemicals market across the world also represent significant opportunity for the company. For instance, low cost development in the Middle East and Caspian holds lucrative commercial opportunities for onshore upstream projects.

In a year’s time, this Zacks Rank #2 (Buy) company’s shares have gained 12.1% against the industry’s decline of 12.4%.

Furthermore, KBR’s penchant for acquisitions and strategic alliances is allowing it to bolster the company’s inorganic growth and expand market share. Recently, the company completed the SGT and the Aspire acquisitions.

It remains optimistic about the prospects of both these buyouts mainly on account of increased government spending across space and defense. Some other notable acquisitions made by the company, include Honeywell Technology Solutions and Wyle. KBR also remains confident about backlog growth in 2018 owing to the pipeline of opportunities.

Other Stocks to Consider

Some other top-ranked stocks from the same space include Willdan Group, Inc. (NASDAQ:WLDN) , Jacobs Engineering Group Inc. (NYSE:JEC) and Dycom Industries, Inc. (NYSE:DY) . While Willdan Group sports a Zacks Rank #1 (Strong Buy), Jacobs Engineering and Dycom Industries carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Willdan surpassed estimates in the trailing four quarters, with an average positive earnings surprise of 17.1%.

Jacobs Engineering outpaced estimates in the preceding four quarters, with an average earnings surprise of 11.4%.

Dycom surpassed estimates in the preceding four quarters, with an average positive earnings surprise of 7.1%.

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