Investment Thesis
KBR demonstrates stable financial footing with positive free cash flow generation ($86M FCF, 4.5% margin) and manageable debt servicing (5.8x interest coverage). However, anemic revenue growth of 1.0% YoY and weak capital returns (6.4% ROE, 1.5% ROA) suggest a mature, stagnant business with limited growth trajectory. Leverage of 1.63x combined with thin 5.3% net margins leaves minimal buffer for operational headwinds.
Strengths
- Positive free cash flow generation with $86M annually available after capex
- Healthy interest coverage ratio of 5.8x providing debt servicing flexibility
- EPS growth outpacing net income growth (15.1% vs 3.0%) indicating disciplined capital management
Risks
- Anemic revenue growth of 1.0% YoY signals stagnant top-line and potential market share losses
- Weak returns on equity (6.4%) and assets (1.5%) indicate inefficient capital deployment
- High leverage (1.63x debt/equity) paired with thin operating margins (9.4%) leaves minimal buffer for margin compression or revenue declines
Key Metrics to Watch
- Revenue growth trajectory and order backlog visibility
- Operating margin sustainability amid cost inflation pressures
- Free cash flow consistency and capital allocation priorities
Financial Metrics
Revenue
1.9B
Net Income
102.0M
EPS (Diluted)
$0.80
Free Cash Flow
86.0M
Total Assets
6.6B
Cash
380.0M
Profitability Ratios
Gross Margin
13.8%
Operating Margin
9.4%
Net Margin
5.3%
ROE
6.4%
ROA
1.5%
FCF Margin
4.5%
Balance Sheet & Liquidity
Current Ratio
1.16x
Quick Ratio
1.16x
Debt/Equity
1.63x
Debt/Assets
76.0%
Interest Coverage
5.81x
Long-term Debt
2.6B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-07T09:28:28.376237 |
Data as of: 2026-04-03 |
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