KBR Receives Contract Modifications From U.S. Air Force

KBR, Inc. KBR has received two contract modifications to upgrade remote tracking stations in the Air Force Satellite Control Network (“AFSCN”). The contract, valued at almost $40 million, has been awarded by both the U.S. Air Force Space Command Space and Missile Systems Center. These fixed price modifications were awarded under the existing Hybrid Remote Tracking Station (RTS) Block Change (RBC) Contract.

The work mainly comprises replacing Automated Remote Tracking Station (ARTS) systems with new RBC systems, and coordinating these systems with the existing antennas and associated subsystems. The company will ensure the successful installation and testing of the systems to boost AFSCN operations.

Recently, it was assigned to perform construction activities at the Diego Garcia Tracking Station in the British Indian Ocean Territory. The contact — worth $2.2 million — includes electrical, mechanical and facilities upgrades that will back the existing Hybrid project at the site.

Factors Driving Top-Line Growth

The company’s Government Solutions constitute 72.7% of second-quarter 2019 revenues. Being a leader in modernizing and maintaining the U.S. national security space infrastructure, the company has provided more than 55 years of ground systems support for the U.S. Air Force, U.S. Navy, NASA, and other agencies.

It has already completed work on the Hawaii Tracking Station, and is currently working on additional Hybrid projects at Guam Tracking Station, Vandenberg Tracking Station and Thule Tracking Station.

The company’s backlog level of $13.82 billion (as of Jun 30, 2019) compared with $13.5 billion in 2018 primarily indicates its strength. Government Solutions revenues increased 19% year over year to $1,033 million in the last reported quarter. This improvement was attributable to new work awarded under its portfolio of well-positioned contracting vehicles and on-contract growth across the logistics business. Continued disaster recovery work for the U.S. Air Force at the Tyndall Air Force Base and benefits from the SGT acquisition, completed in late April 2018, added to the positives.

Share Price Performance

Owing to major contribution from Government and Technological businesses, shares of KBR have gained 68.1% year to date compared with its industry’s 19.5% rally.

The company’s solid performance is backed by an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in each of the trailing five quarters. Its significant increase in backlog level, particularly in Government Solutions, positions it well for future expansion.

Zacks Rank & Other Stocks to Consider

KBR currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the construction sector include Cementos Pacasmayo S.A.A. CPAC, M.D.C. Holdings, Inc. MDC and Quanex Building Products Corporation (NX), each sporting a Zacks Rank #1 (Strong Buy).

Cementos Pacasmayo S.A.A & M.D.C. Holdings surpassed the Zacks Consensus Estimate for revenues in each of the trailing four quarters, with the average being 0.8% and 3.7%, respectively.

Quanex Building Products NX surpassed the consensus estimate for earnings in the trailing four quarters, with the average being 12.51%.

You can see the complete list of today’s Zacks #1 Rank stocks here.

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