With a daily loss of 13.56% and a 3-month loss of 18.05%, KBR Inc (KBR, Financial) has recently been in the spotlight. The company reported a Loss Per Share of 0.93, raising questions about its valuation. Is KBR fairly valued? This article aims to answer this question through a comprehensive analysis. Read on to discover more about KBR's valuation, financial strength, profitability, and growth prospects.
A Brief Introduction to KBR Inc (KBR, Financial)
KBR Inc (KBR), formerly known as Kellogg, Brown & Root, is a global provider of technology, integrated engineering, procurement, and construction delivery, and operations and maintenance services. The company operates in two segments: government solutions and sustainable technology solutions. With a presence in over 75 countries and operations in 40, KBR employs 36,000 people and generated $6.6 billion in revenue in 2022.
Currently, KBR's stock is trading at $50.37 per share, closely aligning with its GF Value of $49.01, indicating a fair valuation. This article will delve deeper into KBR's valuation and financial health, providing a comprehensive analysis for potential investors.
Understanding the GF Value of KBR
The GF Value is an exclusive GuruFocus measure that estimates the intrinsic value of a stock. It's calculated based on historical multiples, a GuruFocus adjustment factor considering the company's past performance and growth, and future business performance estimates.
For KBR, the GF Value suggests a fair valuation. This means the long-term return of KBR's stock is likely to be close to the rate of its business growth. If the stock price significantly deviates from the GF Value Line, it may indicate an overvaluation or undervaluation, affecting future returns.
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Examining KBR's Financial Strength
Investing in companies with poor financial strength can lead to a higher risk of capital loss. Therefore, it's crucial to carefully review a company's financial strength before investing. KBR's cash-to-debt ratio stands at 0.27, ranking lower than 69.09% of 1608 companies in the Construction industry. With an overall financial strength rank of 5 out of 10, KBR's financial health is considered fair.
Assessing KBR's Profitability and Growth
Investing in profitable companies typically carries less risk. KBR has been profitable for 7 out of the past 10 years, with a Loss Per Share of $0.93 in the past 12 months. Its operating margin of 7.13% is better than 63.07% of 1630 companies in the Construction industry. Despite this, KBR's growth ranks lower than 54.15% of companies in the industry, with a 3-year average annual revenue growth of 1.9% and a 3-year average EBITDA growth rate of -0.6%.
Comparing KBR's ROIC and WACC
Comparing a company's return on invested capital (ROIC) to its weighted average cost of capital (WACC) can provide insights into its profitability. When the ROIC exceeds the WACC, it implies the company is creating value for shareholders. For KBR, the ROIC for the past 12 months is 101.97, while its WACC is 10.02, indicating a positive value creation.
Conclusion
In summary, KBR Inc (KBR, Financial) is estimated to be fairly valued. The company's financial condition and profitability are fair, but its growth ranks lower than 59.33% of companies in the Construction industry. If you're interested in learning more about KBR stock, check out its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
