KBR, Inc. KBR is slated to report its third-quarter 2024 results on Oct. 23, 2024, before market open.

In the last reported quarter, its adjusted earnings beat the Zacks Consensus Estimate by 5.1% but revenues missed the same by 1.6%. On a year-over-year basis, the top and bottom lines grew 6% and 12%, respectively.

The company’s earnings surpassed the consensus estimate in each of the trailing four quarters, the average surprise being 4.8%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

How Are Estimates Placed for KBR?

The Zacks Consensus Estimate for third-quarter adjusted earnings has remained unchanged at 83 cents per share over the past 60 days. The projected figure indicates a 10.7% increase from the year-ago quarter’s figure of 75 cents per share.

The consensus estimate for revenues is pegged at $1.95 billion, indicating growth of 10.5% from the prior-year quarter’s level.

KBR, Inc. Price and EPS Surprise

KBR, Inc. price-eps-surprise | KBR, Inc. Quote

Factors at Play For KBR’s Quarterly Results

Revenues: The top line of KBR is expected to have gained in the to-be-reported quarter on the back of solid contributions from its Government Solutions (“GS”) and Sustainable Technology Solutions (“STS”) segments. The GS segment (which contributed 75.3% to second-quarter 2024 revenues) is likely to have gained due to the consistent wins of new and already existing contracts related to domestic and international operations, while growth in the STS segment (which contributed 24.7% to second-quarter revenues) is expected to have been driven by increased revenues from technology sales and engineering, and professional services.

Furthermore, the new and on-contract growth across International, Defense & Intel, and Science and Space in the GS segment and growth across the STS segment are likely to have been aided by key energy transition projects, including ammonia and other low-carbon energy initiatives.

Although contraction in Readiness & Sustainment due to Ukraine funding delays is likely to have constrained the top line to some extent, the aforementioned tailwinds are likely to have more than offset this headwind during the quarter.

KBR has a strong presence in the Middle East, and projects like the infrastructure contract with the Iraqi government and ongoing work with Saudi Arabia and other Gulf countries are expected to contribute significantly in the third quarter.

For the quarter, our model predicts revenues from the GS and STS segments are likely to increase 8.6% to $1.46 billion and 14.6% to $487.2 million, respectively, from the year-ago quarter.

Earnings & Margins: The bottom line of the company is expected to have fared well owing to its cost and expense management, which have been key contributors to its improved profitability and strong cash flow generation in 2024. The company’s focus on efficient project execution, disciplined capital allocation, and prudent financing ensures that it can maintain strong margins and cash conversion rates even in a challenging macroeconomic environment. This focus is expected to continue into the third quarter, positioning KBR for sustained financial strength.

For the third quarter, we expect both the gross margin and adjusted EBITDA margin to expand 50 basis points (bps) and 70 bps on a year-over-year basis, respectively.

What Our Model Indicates for KBR

Our proven model does not conclusively predict an earnings beat for KBR this time around. The company should possess the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — to increase the odds of an earnings beat. This is not the case here, as seen below.

Earnings ESP: KBR has an Earnings ESP of 0.00%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank of 2.

Stocks Poised to Beat on Earnings

Here are some companies in the Zacks Construction sector, which, according to our model, have the right combination of elements to post an earnings beat in their second-quarter results.

Howmet Aerospace Inc. HWM currently has an Earnings ESP of +1.48% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

HWM’s earnings topped the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 10.9%. Earnings for the to-be-reported quarter are expected to increase 41.3% year over year.

UFP Industries, Inc. UFPI currently has an Earnings ESP of +6.24% and a Zacks Rank of 3.

UFPI’s earnings for the to-be-reported quarter are expected to decrease 13.3%. The company reported better-than-expected earnings in two of the last four quarters and missed on other two occasions, the average surprise being 4.6%.

United Rentals, Inc. URI currently has an Earnings ESP of +0.51% and a Zacks Rank of 3.

URI’s earnings for the to-be-reported quarter are expected to increase 6.5%. The company reported better-than-expected earnings in all the last four quarters, the average surprise being 4.7%.

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