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What this page is: Delvantic's full research page for KBR Inc. (KBR) — AI-driven forensic equity research: mechanical valuation models (DCF, EPV, anchored-PE, scenario) plus three independent AI lenses (Quality / Value / Sentiment). Everything below is rendered server-side; you are not missing content that requires JavaScript. All scores are predictions and research opinions, not financial advice.
Our current read (analysis of 2026-08-23): Designation Watch · Gem Score +25 (−100…+100 Quality+Value blend) · Quality 19 · Value 30 · Sentiment 0 (timing only, not weighted) · Composite fair value $46.96 vs $38.13 at analysis
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profile-header/price-overview— company profile, live quote, market capextended-analysis— the core: three AI lens reads with findings, scores, and the analyst memofuture-predictions— our forward price-band predictionsmarket-narrative/ai-findings/gpt-critique— narrative context, cross-model findings, and an adversarial critique of our own analysis (near the end of the document)- Members-only sections (render as login gates for anonymous readers):
price-history,income-trend,key-metrics,financials(statement tables),insider-trading. The analysis above is public; the raw data tables require a free account.
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any ticker resolves at delvantic.com/stock/TICKER ·
raw inputs are public-company filings and market data (via licensed data feeds);
every model, score, lens read, and prediction on this page is Delvantic's own analysis.
KBR Inc.
KBR NYSEKBR Inc. is an engineering, procurement, and construction (EPC) company that specializes in delivering a wide array of services to the energy, technology, and government sectors. Known principally for its role in project management and engineering solutions, the company provides expertise in designing infrastructure and advanced technological systems. KBR supports both commercial and state entities through differentiated technology solutions, which encompass everything from energy and chemicals to aerospace and defense systems. Its significant contribution to the construction and maintenance of energy facilities includes oil and gas projects, highlighting its impact on global energy infrastructure. Additionally, KBR’s work with government entities showcases its capabilities in high-stakes environments, delivering mission-critical solutions in areas such as space exploration and defense. With a foundation dating back to 1901, KBR Inc. has grown into a pivotal player in its industries, recognized for its ability to adapt to emerging technologies and complex project demands, significantly influencing industries reliant on robust engineering solutions.
Price Overview
Price History (1 Year)
Revenue & Net Income Trend
| Period | Revenue | Net Income | Net Margin | YoY/QoQ |
|---|
Key Metrics
EPS (Diluted): 3.21
Total Equity: $1.51B
Shares: 129,000,000
Total Debt: $2.60B
Cash: $500.00M
EBITDA: $947.00M
Total Debt: $2.60B
Cash: $500.00M
Revenue: $7.79B
Revenue: $7.79B
Revenue: $7.79B
Total Equity: $1.51B
Tax Rate: 25.4%
Equity: $1.51B
Total Debt: $2.60B
Cash: $500.00M
Current Liabilities: $1.69B
Long-Term Debt: $2.55B
Total Debt: $2.60B
Total Equity: $1.51B
Shares: 129,000,000
Shares: 129,000,000
CapEx: -$42.00M
Shares: 129,000,000
Stock Price: $37.11
Net Income: $415.00M
Industry Benchmarks
Income Statement (Annual)
Last updated: Aug 3, 2026 5:17pm (20d ago)| Metric | 2021 | 2022 | 2023 | 2025 | 2026 |
|---|---|---|---|---|---|
| Revenue | $7.3B | $6.6B | $7.0B | $7.7B | $7.8B |
| Cost of Revenue | $6.5B | $5.7B | $6.0B | $6.6B | $6.6B |
| Gross Profit | $806.0M | $828.0M | $977.0M | $1.1B | $1.2B |
| Operating Expenses | $575.0M | $485.0M | $529.0M | $440.0M | $372.0M |
| Operating Income | $231.0M | $343.0M | $448.0M | $659.0M | $778.0M |
| Net Income | $18.0M | $190.0M | -$265.0M | $375.0M | $415.0M |
| EBITDA | $377.0M | $480.0M | $589.0M | $815.0M | $947.0M |
| EPS | $0.13 | $1.36 | $-1.96 | $2.79 | $3.21 |
| EPS (Diluted) | $0.12 | $1.26 | $-1.96 | $2.79 | $3.21 |
Balance Sheet (Annual)
Last updated: Aug 3, 2026 4:50pm (20d ago)| Metric | 2021 | 2022 | 2023 | 2025 | 2026 |
|---|---|---|---|---|---|
| Cash & Equivalents | $370.0M | $389.0M | $304.0M | $342.0M | $500.0M |
| Total Current Assets | $2.2B | $1.7B | $1.7B | $1.9B | $2.1B |
| Total Assets | $6.2B | $5.6B | $5.6B | $6.7B | $6.6B |
| Current Liabilities | $1.9B | $1.8B | $1.6B | $1.8B | $1.7B |
| Long-Term Debt | $1.9B | $1.4B | $1.8B | $2.5B | $2.5B |
| Total Liabilities | $4.5B | $3.9B | $4.2B | $5.2B | $5.1B |
| Total Equity | $1.7B | $1.6B | $1.4B | $1.5B | $1.5B |
| Retained Earnings | $1.3B | $1.4B | $1.1B | $1.4B | $1.7B |
Cash Flow (Annual)
Last updated: Aug 3, 2026 5:17pm (20d ago)| Metric | 2021 | 2022 | 2023 | 2025 | 2026 |
|---|---|---|---|---|---|
| Operating Cash Flow | $278.0M | $396.0M | $331.0M | $462.0M | — |
| Capital Expenditure | -$30.0M | -$71.0M | -$80.0M | -$52.0M | -$42.0M |
| Free Cash Flow | $248.0M | $325.0M | $251.0M | $410.0M | — |
| Acquisitions (net) | -$399.0M | -$73.0M | $0 | -$738.0M | -$14.0M |
| Net Debt Issued / (Repaid) | -$44.0M | -$16.0M | — | — | — |
| Dividends Paid | -$61.0M | -$66.0M | -$72.0M | -$79.0M | -$84.0M |
| Stock Buybacks | -$82.0M | -$203.0M | -$138.0M | -$218.0M | -$329.0M |
| Net Change in Cash | -$66.0M | $19.0M | -$85.0M | $46.0M | $155.0M |
Growth Trends (YoY %)
Last updated: Aug 3, 2026 5:17pm (20d ago)| Metric | 2022 | 2023 | 2025 | 2026 |
|---|---|---|---|---|
| Revenue Growth | -10.6% | +6.0% | +10.8% | +1.0% |
| Gross Profit Growth | +2.7% | +18.0% | +12.5% | +4.6% |
| Operating Income Growth | +48.5% | +30.6% | +47.1% | +18.1% |
| Net Income Growth | +955.6% | -239.5% | +241.5% | +10.7% |
| EBITDA Growth | +27.3% | +22.7% | +38.4% | +16.2% |
Dividend History (Last 20)
Last updated: Aug 3, 2026 5:18pm (20d ago)| Date | Dividend | Declaration | Record | Payment |
|---|---|---|---|---|
| 2026-06-15 | $0.17 | — | — | — |
| 2026-03-13 | $0.17 | — | — | — |
| 2025-12-15 | $0.17 | — | — | — |
| 2025-09-15 | $0.17 | — | — | — |
| 2025-06-13 | $0.17 | — | — | — |
| 2025-03-14 | $0.17 | — | — | — |
| 2024-12-13 | $0.15 | — | — | — |
| 2024-09-16 | $0.15 | — | — | — |
| 2024-06-17 | $0.15 | — | — | — |
| 2024-03-14 | $0.15 | — | — | — |
| 2023-12-14 | $0.14 | — | — | — |
| 2023-09-14 | $0.14 | — | — | — |
| 2023-06-14 | $0.14 | — | — | — |
| 2023-03-14 | $0.14 | — | — | — |
| 2022-12-14 | $0.12 | — | — | — |
| 2022-09-14 | $0.12 | — | — | — |
| 2022-06-14 | $0.12 | — | — | — |
| 2022-03-14 | $0.12 | — | — | — |
| 2021-12-14 | $0.11 | — | — | — |
| 2021-09-14 | $0.11 | — | — | — |
Deep Analysis
Risk : Reward — if the last quarter repeats
Live · as of 2026-08-19 09:01Recovery pays +78%; another quarter like the worst recent one costs 22%. Ratio 3.5:1.
| Case | Growth | Margin | Fair value | vs price ($38.13) |
|---|---|---|---|---|
| Bull — recovery | +2% | 9.2% | $68.01 | +78% |
| Base — stabilizes | +1% | 8.0% | $58.31 | +53% |
| Bear — keeps slipping | +1% | 6.8% | $49.02 | +29% |
| Stress — last quarter repeats | -11% | 6.0% | $29.65 | -22% |
Narrative Economics
market-narrative step).
AI Lens 4th lens · how AI reaches this business · 5-yr
2026-08-17AI-driven power and industrial buildout (data centers, LNG, ammonia/hydrogen, grid) expands the pipeline of physical projects that need licensed process technology, FEED work and program management — demand KBR sells into and cannot be satisfied by software.
In Government Solutions and reimbursable engineering, the monetized unit is the staffed hour or FTE; when AI compresses document production, systems engineering, analysis and program admin, the billable base shrinks and cost-plus mechanics hand the savings back to the agency or owner at the next rebid.
Whether KBR converts AI productivity into outcome-, milestone- or license-priced revenue instead of headcount-priced revenue. Observable: STS revenue and technology-licensing/royalty share of total, plus revenue-per-employee and headcount trend in Government Solutions.
Validated, guaranteed-performance process IP (ammonia/syngas/refining) with reference plants and catalyst tie-ins; plus cleared personnel, facility clearances, past-performance qualifications and contract vehicles that gate US/UK government awards.
AI Lens thesis
AI reaches KBR through two opposite channels. On the government and reimbursable services side — a people business at ~$58k gross profit per revenue dollar structure and thin 14.8% gross margin — the product IS qualified labor hours, and cheaper intelligence deflates the very unit being invoiced while contract structures prevent retaining the gain; the offset is that agencies cannot insource this work (no headcount, no clearance-cleared capacity, no willingness to own program liability), so the volume erosion is gradual and rebid-paced rather than abrupt. On the technology side, KBR licenses proprietary process designs with performance guarantees and earns royalties tied to physical plants; AI shortens design cycles, improves FEED accuracy and reduces the estimating errors that historically produced fixed-price charges, and that saving is genuinely retainable. Net: exposure is real but bidirectional, and the direction is decided by contract-mix migration, not by AI capability.
What the market may be underestimating
Upside KBR is an indirect AI-capex beneficiary: the ammonia, hydrogen, power and industrial-water engineering it licenses and designs sits directly in the datacenter energy supply chain, and margin has already climbed 3.1%→10% operating without an AI story attached.
Downside Cost-plus accounting can mask erosion — as AI cuts the hours needed, revenue and the fee base contract together, so KBR could report improving margin percentages while absolute dollar profit stalls; the share-loss gap already visible (1.0% vs industry 4.6%) is where that would first appear.
Outcome range spread 40
Growth Outlook
Analyzed 2026-08-17 15:33The question every valuation on this page silently assumes: is this company likely to grow? Judged forward — the business, its category, the world — against what's already printed.
Claude Reading
The raw quarterly trajectory tells a less flattering story than the "accelerating" tag suggests. Revenue peaked at $2.11B in Q4 2024 and has drifted down every quarter since: $2.02B → $1.95B → $1.93B → $1.89B → $1.92B → $1.98B. That's a mild sequential recovery in the last two quarters, not acceleration off a trough. Net income tells a similar story — $115M in Q4 2025 down to $102M then $96M in the two most recent quarters. Margins compressed from 6.0% to 4.8% over three quarters. So the "recent_earnings_yoy +10.7%" statistic is flattered by a soft $73M comp in Q2 2025; the underlying direction is decelerating revenue and compressing margins, not the mid-cycle expansion the synthesis implies.
The balance sheet deserves more skepticism than the models grant. $2.60B debt against $1.51B equity (D/E 1.72) and only $500M cash, on a business generating ~$415M in net income with capex of just $42M — yet the file shows no operating cash flow or FCF. That absence is not a data gap to hand-wave; the thesis evaluation itself flags the "-4.9% implied FCF decline" and "negative FCF" as the top bear point (weight 78). If reported NI is $415M and capex is $42M, FCF should be ~$370M-plus absent working capital drains — which means either large working capital consumption on long-cycle contracts (typical of EPC, and cyclically unwind-able) or something worse. Without the OCF line, I can't distinguish. The market-forces model is right to withhold a strong buy on this basis; the synthesis model is too casual about it.
The insider buying is the single most interesting signal here. Four open-market purchases totaling ~30,000 shares in May 2026 at prices presumably near current levels ($38 area) is real conviction — not 10b5-1 auto-awards, actual P-code purchases. That's the kind of signal that matters at a mature industrial trading below tangible book-plus-goodwill logic. It supports the synthesis's undervaluation lean but doesn't override the cash-conversion question. A contrarian would argue: KBR is a fixed-price contract EPC dressed up as a government services compounder; the 2023 -$265M loss is only two years stale and reminds you what one bad program does to this model. The Jacobs comparison the pre-flight model floats is generous — Jacobs has divested away from lump-sum EPC precisely because the market rightly discounts that risk. KBR's 15% gross margin vs Jacobs' higher-quality mix explains most of the multiple gap; it's not mispricing.
I land at partial agreement with the fair-value synthesis but lean more cautious than its $45.84 signal-adjusted target. At 11.9x earnings, 7.4x EV/EBITDA, and 0.9x EV/revenue, KBR is cheap on multiples but appropriately cheap for a levered EPC with unproven cash conversion and decelerating top line. The insider buying and the government services mix argue against outright bearishness. Fair value in the low-$40s feels right — call it $40-44 — meaning ~10-15% upside from $38.13, not the 20% the synthesis claims. That's not enough margin of safety for a business with 1.7x D/E, unclear FCF, and a fresh loss year in living memory. I'd want to see the Q3 2026 print confirm the sequential revenue recovery is real and see actual OCF disclosure before sizing up. The insider purchases justify a watch-list starter but not a conviction position.
GPT Reading
At $38.13, KBR looks misclassified by the market as a messy cyclical contractor when the reported earnings stream is now much sturdier than that label suggests. Annual revenue has gone from $6.56B in 2022 to $7.79B in 2026, a roughly 4.4% CAGR through a period that included the 2023 net loss, yet operating income has improved much faster, from $343M to $778M, taking operating margin from 5.2% to 10.0%. That is the core fact here: this is not a revenue growth story, it is a margin and mix story, and the margin improvement is too large to dismiss as noise. Even after a bumpy quarterly path, trailing quarterly net income over the last four reported quarters sums to about $424M on roughly $7.72B of revenue, consistent with the annual run rate. Against a $4.84B market cap, that is about 11-12x earnings for a business generating mid-teens ROIC and 27%+ ROE. For a company with visible government-facing exposure and low capex needs of just $42M on nearly $7.8B of sales, that multiple is simply not demanding.
What stands out in the quarterlies is not growth, but durability. Revenue has been flat-to-slightly-down, oscillating between $1.89B and $2.02B over the last six quarters, and the latest quarter at $1.98B was only modestly below the $2.02B posted a year earlier. Yet net income in that latest quarter was $96M versus $116M in the year-ago period, while the prior two quarters were stronger at $102M and $111M. In other words, earnings are holding around a $400M+ annualized base despite no real top-line help. That matters because if KBR were a pure EPC name with fragile project economics, this kind of revenue stall would normally crack profitability much more sharply. Instead, gross profit increased from $828M in 2022 to $1.15B in 2026, and gross margin climbed from 12.6% to 14.8%. The market seems to be treating the 2023 loss of $265M as evidence of structural fragility, but the post-2023 numbers look more like an isolated reset followed by a materially better earnings profile.
The valuation gap is easier to justify if leverage or balance-sheet stress were acute, but the data do not show distress. Debt is $2.60B against $500M of cash, so net debt is around $2.1B; that is real leverage, especially against only $1.51B of equity and a 1.72x debt-to-equity ratio, but it is not excessive relative to a business earning $778M of operating income and trading at just 7.4x EV/EBITDA. If anything, the balance sheet explains why the stock is cheap, not why it should stay this cheap. The market cap plus net debt implies an enterprise value around $6.9B, or just under 0.9x revenue and under 9x EBIT. For a business that has doubled operating income from 2022 to 2026 while keeping capex minimal and paying a dividend with only a 20% payout ratio, that pricing bakes in either a meaningful profit reversal or chronically poor cash conversion. The insider buying in May—multiple open-market purchases totaling nearly 30,000 shares—is a relevant tell here because insiders usually know whether margins are peaking artificially or whether the earnings base is more durable than outsiders think.
The best bear case is that the accounting earnings are ahead of the cash economics, and that matters a lot in contracting businesses. We do not have operating cash flow or free cash flow figures, and the briefing itself flags weak cash flow quality. That omission is the single biggest reason not to be aggressive. Quarterly net margins also clearly are not steadily compounding: they ranged from 3.6% to 6.0% in the last eight quarters, and the most recent quarter’s 4.8% margin was below the 6.0% posted in 2025-10 and 5.9% in 2026-01. Revenue growth has slowed to roughly 1% year over year in the latest quarter, so if margin expansion has already done most of the work, there is a credible argument that this is close to peak earnings on stagnant sales. Add in the leverage, current ratio of 1.2, and the historical 2023 blow-up, and a skeptic can argue that 11.9x earnings is not cheap but appropriate for a company still carrying legacy project and working-capital risk.
I still come out positive because the current price already discounts most of that skepticism. At $38, the market is valuing KBR at about 0.63x sales and barely above 11x earnings despite a four-year climb in operating margin from 3.1% in 2021 to 10.0% in 2026. That is too low unless the next step is a real earnings rollback. What would change my mind is specific, not abstract: if the next two quarters show revenue stuck below $1.95B while net margin slips back toward the 3.5%-4.0% range, or if annual operating income falls materially below $700M, then the current earnings base is not durable and the discount is deserved. Conversely, if KBR converts these earnings into solid cash and sustains quarterly net income around $100M on flat revenue, I think the stock should re-rate toward at least 13-14x earnings, which supports something in the mid-to-high $40s.
Grok Reading
KBR’s numbers describe a contractor that has completed a real earnings repair cycle and is now being priced as if that repair never stuck. Annual revenue edged from $7.71B to $7.79B while operating income climbed from $659M to $778M and net income from $375M to $415M; the 2023 hole of –$265M net is behind them. Quarterly run-rate has stabilized near $1.9–2.0B with net margins oscillating between roughly 3.7% and 6.0%, most recently 4.8–5.9%. At $38.13 the stock screens at 11.9x earnings, 0.63x sales and 7.4x EV/EBITDA—multiples that embed almost no credit for the government-services mix or the operating-margin expansion to ~10%. ROE of 27% on only $1.51B of equity is impressive on its face, yet it is levered: $2.60B of debt against $500M cash leaves net leverage uncomfortable and explains why the market refuses to pay a normal industrials multiple. Insider open-market buying of roughly 30k shares in May 2026 is a concrete positive that sits oddly beside the absent free-cash-flow line items.
What stands out is the gap between reported profitability and cash conversion. Capex is trivial at –$42M, so the business is structurally capital-light, yet operating and free cash flow are simply blank in the briefing and secondary signals flag “weak cash flow quality.” That absence is the central tension: earnings have improved, the P/E is depressed, and the valuation models spit out ~$46 fair value, but without visible FCF the quality of the $415M net income remains unproven. Revenue CAGR of 5.8% with recent year-over-year growth of only 1% also undercuts any growth-premium argument; this is a low-single-digit top-line story whose upside is almost entirely margin and multiple re-rating, not volume.
The strongest opposing case is straightforward. Debt-to-equity of 1.72, a current ratio of only 1.22, and the market’s implied skepticism (pricing in structural mediocrity at 0.6x sales) are rational responses to an EPC legacy that still carries fixed-price execution risk and energy-capex cyclicality. A smart bear cites the 2023 loss, the blank FCF, and the possibility that government budget delays or working-capital swings will keep cash conversion permanently below earnings. I weigh that risk as real but already more than discounted: an 11.9x multiple on repaired, higher-margin earnings already assumes the cash never shows up. If even half the earnings convert, the equity is cheap; the insider purchases suggest management sees the same disconnect.
I would flip to fairly valued or overvalued if the next two reported free-cash-flow prints stay negative or if net debt rises further without a corresponding backlog or margin step-up. Conversely, two consecutive quarters of FCF conversion above 70% of net income plus stable defense/government awards would justify a move toward the mid-$40s and force a higher conviction bull stance.
Big-3 Panel — where each AI stands
Advanced Analysis Forensic deep-dive · separate lenses
KBR shows a genuine operational improvement arc: revenue from 7.34B (2021) to 7.79B (2026), gross margin from 11% to 14.8%, and operating margin nearly tripling from 3.1% to 10%. Net income swung from a 265M loss in 2023 to 415M in 2026, and diluted share count fell from 156M (2022) to 129M (2026), a roughly 2.9% annual reduction that concentrates per-share value. Earnings quality is clean on the mechanical checks: accruals -5% of assets and OCF/NI at 4.38x indicate reported profits are backed by cash, and Altman Z at 2.57 sits in the grey but not distressed zone. The concerning texture is the balance sheet and FCF volatility. Net debt is roughly 2.1B against only 500M liquid cash, so the balance sheet is a constraint. FCF has been positive most years (248M, 325M, 251M, 410M) but printed -42M in 2026 while net income was 415M, a sharp working-capital or acquisition-driven divergence that warrants scrutiny given the 'weak cash flow quality' flag. Insider behavior is a real positive: four open-market P-Purchases in May 2026 totaling roughly 945K across four different insiders (Sabater, Evans, Moore, Von Thaer) with zero sales - a cluster buy pattern that generally reflects genuine conviction rather than optics.
Verify before trusting this (6)
- Cause of 2026 FCF at -42M despite 415M net income - working capital, contract loss provisions, acquisition outflows, or pension contributions
- Debt maturity schedule and covenants against the 2.1B net debt position
- Government/defense services customer concentration (KBR has significant US federal exposure)
- Nature of the 2023 -265M net loss - impairment, legal, or contract charges - and whether recurrence risk remains
- Backlog trend, book-to-bill, and government services vs sustainable technology solutions segment mix
- Whether the 2026 buyback pace is sustainable given net debt and the FCF air pocket
The composite fair value of $46.96 and signal-adjusted $45.84 both sit in a tight band, corroborated by an EPV floor of $48.92 and a DCF of $45.98 - the methods agree, which raises my confidence that deserved value is genuinely in the mid-$40s rather than a runaway output. Against a $38.13 price, that is roughly a 17-20% gap, or about $8 per share of margin. High earnings quality means I do not need to haircut deserved value, and the Solid business grade (improving margins, buybacks, clean accruals) supports rather than inflates the anchor. The bear case - lumpy FCF, fixed-price EPC execution risk, and leverage - is real and explains why the market is not paying full freight; a modest discount here is appropriate, not a mispricing. What has to go right to justify $46 is continued mid-single-digit revenue growth, sustained operating margin expansion in Government Solutions, and no large fixed-price blowups. That is plausible but not heroic, which is why I land on Modestly Cheap rather than Undervalued. This is not a fat-pitch dislocation; it is a reasonable-quality compounder trading a bit below what it deserves.
Verify before trusting this (5)
- Government Solutions backlog and book-to-bill trajectory in latest 10-Q
- any fixed-price contract charges or EAC revisions
- free cash flow conversion vs net income over trailing four quarters
- net debt / EBITDA trend and refinancing schedule
- segment margin guidance for STS given energy capex sensitivity
KBR sits in a quiet corner of the tape. The regime is mildly risk-on (VIX 14.3, S&P near highs), which is a gentle positive backdrop, but with a beta of 0.45 the market's mood barely lands here either way. There is no active narrative pulling this name up or down - the story is 'steady government-backed engineering compounder' at minimal intensity with low cult coefficient, meaning no momentum crowd is defending or attacking it. Analyst tone and story-vs-fundamentals gap are both neutral; the discount to DCF is a fundamentals read, not a sentiment overhang. The recent $60M NATO air-and-missile-defense contract feeds the defense-tailwind angle and the coming Trinzic spin-off gives a mild narrative hook, but neither is intense enough to drive the tape. On the other side, the Aug 5 'warning signs' drawdown shows the stock is vulnerable to any credibility ding on execution given its EPC legacy, and rising D/E (1.31 to 1.72) is a small drag if risk sentiment turns. Net: this is a low-signal sentiment picture - a whisper of tailwind from defense news and calm tape, offset by the absence of any real narrative bid.
Verify before trusting this (5)
- Any news around the Trinzic spin-off timeline or valuation guidance - could ignite a real narrative bid
- Defense budget headlines and NATO contract cadence over next quarter
- Whether analyst target revisions start clustering upward post-contract wins
- Sector rotation into defense/government-services names vs energy-EPC selloffs
- Any execution miss on a large fixed-price contract - would reactivate the bear frame fast
AI reaches KBR through two opposite channels. On the government and reimbursable services side — a people business at ~$58k gross profit per revenue dollar structure and thin 14.8% gross margin — the product IS qualified labor hours, and cheaper intelligence deflates the very unit being invoiced while contract structures prevent retaining the gain; the offset is that agencies cannot insource this work (no headcount, no clearance-cleared capacity, no willingness to own program liability), so the volume erosion is gradual and rebid-paced rather than abrupt. On the technology side, KBR licenses proprietary process designs with performance guarantees and earns royalties tied to physical plants; AI shortens design cycles, improves FEED accuracy and reduces the estimating errors that historically produced fixed-price charges, and that saving is genuinely retainable. Net: exposure is real but bidirectional, and the direction is decided by contract-mix migration, not by AI capability.
Verify before trusting this (8)
- Headcount trend vs backlog
- Per-FTE pricing in recompetes
- Licensing/royalty share of revenue
- Operating margin above 10% sustained
- Fee-type mix in new awards
- Absolute gross profit dollars, not %
- Government backlog and book-to-bill
- Licensed plant award announcements
Two different worlds sit inside this company. Government engineering and mission support is funded by defense and national-security appropriations, which are rising in real terms across the US, UK and NATO — that demand is insensitive to the 4.63% 10-year and to macro headwinds, and it anchors roughly the majority of revenue. The other world, energy/chemicals process technology, depends on final investment decisions for ammonia, LNG-adjacent chemicals and circular plastics; higher long rates and softer commodity economics push those decisions right, which is exactly what the sector's contraction phase is measuring. The net is a business whose demand does not disappear but whose growth engine is on hold: appropriations keep the base, deferred FIDs cap the upside. The world-level swing factor is whether government scope is being competed away (a share problem that persists) or simply rolling off a completed low-margin logistics program (a comparison problem that annualizes out within a year).
When we made this prediction on Aug 18, 2026, KBR was $37.55. We expect it to be $42.00 by Feb 2027, and we consider it great value under $36.00. This is an early model (v0.6.0) — the direction is more reliable than the exact price. Made Aug 18, 2026.
Blue is our prediction, starting the day we made it. Grey is a slower route to the same place — the same destination, taking longer. Black is the actual price, so you can see how we are doing.