KBRwyle, a global government services unit of
KBR, Inc. KBR, has received a contract
modification to provide base operating support services (âBOSSâ) at
the Navy Support Facility, Diego Garcia, located in the British
Indian Ocean Territory. The contract is valued at $62
million.
Per the deal, KBRwyle will look after the welfare and wellbeing of
its sailors, as well as support the base. KBRwyle will facilitate
sailors with IT, management, utilities, administration and public
safety services; morale, welfare and recreation support; as well as
port and air operations facilities.
The BOSS contract, which was awarded by Naval Facilities
Engineering Command (âNAVFACâ) Pacific, was originally received by
KBR in 2017. Moreover, the $515-million contact marks the first of
a possible seven option years.
KBRwyle has been offering operations, maintenance and logistics
services to the U.S. government since WWII. Notably, the company is
now performing these services in the most extreme and austere
environments for the U.S. Navy and Army military bases across the
world.
Contracts Wins a Major Growth Driver
KBRwyle continues its contract winning spree with the addition of
another year of BOSS contracts to its list. On Jan 7, 2019, KBRwyle
secured a seat on a U.S. Army Information Technology Enterprise
Solutions-3 (âITES-3â) services contract for its business unit,
SGT, LLC. Per the contract, KBRwyle will provide a wide range of IT
services to help the Army in fulfilling its warfighter and global
mission.
Also, it clinched two task order modifications amounting to $114
million from the Army Contracting Command on Dec 11, 2018. Under
the contract, the company will provide logistics support services
to the U.S. Army in Europe and the Arabian Peninsula. The move
underscores KBR's solid presence and expertise in providing
professional services to support military needs.
These contracts highlight KBRâs efforts to earn high-end and
differentiated government services work.
Our Take
We believe that the recent move will further boost revenues in
KBRâs Government Services segment. The segment, accounting for more
than 72.6% of its total revenues, has been performing pretty
well.
In the first nine months of 2018, KBRâs total backlog of $13.5
billion was up 27.4% from a year ago. Out of the total backlog,
81.8% work was done by government services segment. In fact,
backlog in the segment increased 34.9% on a year-over-year basis in
the said period.
Notably, the companyâs total revenues increased 23.6% year over
year, courtesy of 59.5% growth of the government services business.
Presently, KBR is optimizing its growth potential on the back of
government services business.
Meanwhile, shares of the company have decreased 15.5% over a year,
comparing favorably with its industryâs decline of 30.1%.
Zacks Rank & Stocks to Consider
Currently, KBR carries a Zacks Rank #3 (Hold). Some better-ranked
stocks in the Construction sector are Gates Industrial Corporation
PLC GTES, Great Lakes Dredge & Dock Corporation GLDD and
Armstrong Flooring, Inc. AFI. While Gates Industrial sports a Zacks
Rank #1 (Strong Buy), Great Lakes and Armstrong Flooring both carry
a Zacks Rank #2 (Buy). You can see the complete list of
todayâs Zacks #1 Rank stocks here.
Gates Industrial has an expected earnings growth rate of 44.6% for
2018.
Great Lakesâ earnings in 2018 are expected to increase 111%.
Armstrong Flooring has a projected earnings growth rate of 104.8%
for 2018.
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