KBR, Inc. (KBR) stock analysis

P/E below its 5-year median

KBR's P/E of 10.4 is below its own 5-year median of 21.7.

P/E below the industry

KBR's P/E of 10.4 is below the Heavy Construction Other Than Building Construction Contractors median of 28.1.

EV/EBITDA below its 5-year median

KBR's EV/EBITDA of 7.5 is below its 5-year median of 15.1.

P/B below the industry

KBR's price-to-book of 2.59 is below the Heavy Construction Other Than Building Construction Contractors median of 5.11.

Trading below fair value

The share price of $36.29 is below our fair value estimate of $78.29.

Margin of safety over 20%

The price is 53.6% below fair value, more than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew 5.9% a year over the last three fiscal years, short of the 10% we look for.

EPS growing 10%+ a year

Diluted EPS grew 36.6% a year over the last three fiscal years.

Earnings acceleration

Needs positive net income now, a year ago and five years ago.

Growing slower than the industry

Revenue grew -2.4% over the last twelve months; the Heavy Construction Other Than Building Construction Contractors median is 5.2%.

Guidance issued

The latest outlook (Fiscal Year 2026 Revenues, Oct 29, 2026) was issued for the first time, so it neither adds nor takes away points.

Gross margin improving

Gross margin was 14.7% over the last twelve months, against 14.4% a year earlier.

Return on equity under 15%

Return on equity was 27.4% over the last twelve months and averaged 10.0% over five years; we look for 15% on both.

Return on capital over 10%

Return on invested capital was 15.1%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

KBR's return on equity of 27.4% is above the Heavy Construction Other Than Building Construction Contractors median of 14.8%.

Earnings over 5 years

Needs positive net income five years ago and in the latest year.

Net margin above its 5-year average

Net margin was 5.7% over the last twelve months, against a 5-year average of 1.9%.

Net margin above the industry

KBR's net margin of 5.7% is above the Heavy Construction Other Than Building Construction Contractors median of 1.6%.

High debt

Debt is 144% of shareholders' equity, above the 40% we consider low.

Debt rising against equity

Debt to equity rose from 101% five years ago to 144%.

Debt not well covered by cash flow

Operating cash flow over the last twelve months equals 15.0% of total debt; we look for at least 20%.

Interest well covered

Operating income covers interest expense 5.0 times.

Short-term assets don't cover short-term debts

Current assets are 0.94 times current liabilities.

Bankruptcy risk in the grey zone

The Altman Z-score is 2.35; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

KBR paid dividends worth 1.8% of the share price over the last twelve months.

Yield below Treasuries

The 1.8% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; KBR yields 1.8%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 19.0% of net income.

Covered by free cash flow

Dividends take 25.6% of free cash flow.