KBR has been treading water for the past six months, recording a small loss of 3.7% while holding steady at $49.51. The stock also fell short of the S&P 500’s 14.9% gain during that period.
Given the weaker price action, is now a good time to buy KBR? Or should investors expect a bumpy road ahead? Find out in our full research report, it’s free.
Why Does KBR Stock Spark Debate?
Known for projects like the construction of Guantanamo Bay, KBR provides professional services and technologies, specializing in engineering, construction, and government services sectors.
Two Positive Attributes:
1. Encouraging Short-Term Revenue Growth
We at StockStory place the most emphasis on long-term growth, but within industrials, a stretched historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. KBR’s annualized revenue growth of 9.9% over the last two years is above its five-year trend, suggesting its demand recently accelerated. 
2. Operating Margin Rising, Profits Up
Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.
KBR’s operating margin rose by 6.3 percentage points over the last five years, as its sales growth gave it operating leverage. Its operating margin for the trailing 12 months was 8.7%.
One Reason to be Careful:
Weak Backlog Growth Points to Soft Demand
In addition to reported revenue, backlog is a useful data point for analyzing Defense Contractors companies. This metric shows the value of outstanding orders that have not yet been executed or delivered, giving visibility into KBR’s future revenue streams.
KBR’s backlog came in at $16.7 billion in the latest quarter, and over the last two years, its year-on-year growth averaged 3.9%. This performance was underwhelming and suggests that increasing competition is causing challenges in winning new orders. 
Final Judgment
KBR has huge potential even though it has some open questions. With its shares underperforming the market lately, the stock trades at 12.9× forward P/E (or $49.51 per share). Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
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