Value
9.0/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 9.0 |
| P/S | 10.0 |
| EV/EBITDA | 5.8 |
| Fwd P/E | 9.6 |
| PEG | 9.8 |
| Analyst target | 9.0 |
- ▸Forward P/E: 8.0x
- ▸PEG: 0.54
- ▸Attractively valued
KBR · Why this verdict
Why KBR (KBR) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
Show full disclosure ▾Hide full disclosure ▴
About TrendMatrix. TrendMatrix is a publisher of general securities research and market commentary. We publish on a regular schedule. All content is the same for every subscriber in a tier — we do not provide personalized investment advice and we do not take into account any individual subscriber's financial situation, investment objectives, risk tolerance, tax situation, or holdings.
Not investment advice. TrendMatrix is not a registered investment adviser. Our content is for informational and educational purposes only. Consult your own licensed investment adviser, broker, or tax professional before making any investment decision.
Conflicts and positions. The TrendMatrix editorial team frequently holds personal long-term positions in securities discussed. We disclose positions held at the time of publication on each piece. We maintain a trading-window policy: we do not initiate or close positions in the same direction as a TrendMatrix publication within 24 hours before or 72 hours after publication.
No paid promotion. TrendMatrix does not accept payment from any issuer, broker, or third party in exchange for coverage of any security. Our sole compensation is subscription revenue.
No fiduciary duty. No fiduciary, advisory, or agency relationship is created between you and TrendMatrix by reading our content or subscribing to our service.
Performance. Past performance is not indicative of future results. Performance figures reflect the published model only and do not reflect any individual subscriber's actual results.
VerdictSELL
Overall score4.9/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
KBR has delivered four consecutive earnings beats and trades at an attractive forward multiple with 16.4% upside to the analyst target, but below-minimum business quality, a confirmed technical downtrend with a death cross, and heavy reliance on US government contracts limit new-money conviction despite the favorable price geometry.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
All four of the most recent quarterly reports delivered positive earnings surprises, with the most recent quarter coming in at $0.96 against a $0.91 estimate and an average beat of roughly 5% across the streak — a consistent track record of under-promising and over-delivering on quarterly expectations. Earnings | EPS surprise remains positive in each of the next 2 quarterly reports. | →Stable |
| CounterThe average beat of roughly 5% is narrow enough that any one-quarter slip in project execution or contract timing could flip the streak to a miss; government contract delays and re-bids are particularly difficult to predict and can create lumpy earnings. | ||
The US government accounts for 57% of revenue, meaning that budget sequestration, contract re-bids, or shifts in federal spending priorities could materially impair more than half of the company's top line with limited near-term recourse. Bear case | Non-government revenue grows to represent more than 50% of total revenue within 8 quarters. | →Stable |
| CounterDeep integration with US government programs can also be a structural entry barrier that protects the existing contract base from commercial competition; the concentration may reflect durable program incumbency as much as it does customer dependency. | ||
The stock trades at a forward price-to-earnings multiple of 8.4 times with a PEG ratio of 0.54, and consensus analyst targets imply 16.4% upside from the current price — a combination that is inexpensive relative to the earnings trajectory even given the quality concerns. Valuation breakdown | Analyst consensus targets hold at or above current levels and the stock closes the gap to the $40.52 target within 12 months. | →Stable |
| CounterA low multiple with declining revenue can persist as a value trap; the attractive PEG assumes growth forecasts that remain unvalidated given the recent 5% revenue contraction and a weak Piotroski financial health score. | ||
Financial health as measured by the Piotroski framework scores 3 out of 9 — a weak reading — free cash flow is running at only 62% of net income raising an earnings quality concern, and there is no identified competitive moat, collectively leaving business quality at the minimum threshold. Quality breakdown | Piotroski financial health score rises above 6 for 2 consecutive reporting periods, confirming a genuine improvement in financial quality. | →Stable |
| CounterROE of 29% indicates that the business is generating strong returns on its equity base, and a recovery in government contract activity could quickly lift the financial health indicators without requiring a structural change in the business model. | ||
All four of the most recent quarterly reports delivered positive earnings surprises, with the most recent quarter coming in at $0.96 against a $0.91 estimate and an average beat of roughly 5% across the streak — a consistent track record of under-promising and over-delivering on quarterly expectations.
→StableEarnings
- Expectation
- EPS surprise remains positive in each of the next 2 quarterly reports.
CounterThe average beat of roughly 5% is narrow enough that any one-quarter slip in project execution or contract timing could flip the streak to a miss; government contract delays and re-bids are particularly difficult to predict and can create lumpy earnings.
The US government accounts for 57% of revenue, meaning that budget sequestration, contract re-bids, or shifts in federal spending priorities could materially impair more than half of the company's top line with limited near-term recourse.
→StableBear case
- Expectation
- Non-government revenue grows to represent more than 50% of total revenue within 8 quarters.
CounterDeep integration with US government programs can also be a structural entry barrier that protects the existing contract base from commercial competition; the concentration may reflect durable program incumbency as much as it does customer dependency.
The stock trades at a forward price-to-earnings multiple of 8.4 times with a PEG ratio of 0.54, and consensus analyst targets imply 16.4% upside from the current price — a combination that is inexpensive relative to the earnings trajectory even given the quality concerns.
→StableValuation breakdown
- Expectation
- Analyst consensus targets hold at or above current levels and the stock closes the gap to the $40.52 target within 12 months.
CounterA low multiple with declining revenue can persist as a value trap; the attractive PEG assumes growth forecasts that remain unvalidated given the recent 5% revenue contraction and a weak Piotroski financial health score.
Financial health as measured by the Piotroski framework scores 3 out of 9 — a weak reading — free cash flow is running at only 62% of net income raising an earnings quality concern, and there is no identified competitive moat, collectively leaving business quality at the minimum threshold.
→StableQuality breakdown
- Expectation
- Piotroski financial health score rises above 6 for 2 consecutive reporting periods, confirming a genuine improvement in financial quality.
CounterROE of 29% indicates that the business is generating strong returns on its equity base, and a recovery in government contract activity could quickly lift the financial health indicators without requiring a structural change in the business model.
Per-dimension breakdown
Quality
3.9/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 9.7 |
| ROA | 3.3 |
| Gross margin | 0.0 |
| Op margin | 2.7 |
| Net margin | 2.6 |
| Current ratio | 4.5 |
| FCF quality | 4.8 |
| Moat | 4.2 |
| Piotroski F | 3.3 |
- ▸Excellent ROE: 29%
- ▸Earnings quality warning: 62% FCF/NI
- ▸No competitive moat
- ▸Weak Piotroski F-Score: 3/9
Growth
0.8/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 1.3 |
| EPS growth | 0.3 |
- ▸Declining revenue: -5%
Momentum
1.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.5 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 1.0 |
| Volume | 0.0 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA, MA slope -5.3%/30d — confirmed downtrend
Sentiment
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 7.0 |
| Analyst rating | 5.0 |
| Price target | 9.3 |
- ▸LLM news sentiment: +0.40 (n=1)
- ▸Analyst upside: 44%
Insider
6.5/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 6.5 |
| insider conviction | 8.0 |
| holder change | 5.1 |
- ▸Modest insider buying — $945,166 (0.022% of mkt cap)
Peer rank
4.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 9.3 |
| quality rank | 6.3 |
| growth rank | 1.0 |
- ▸Attractive P/E vs peers
Technical
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 9.5 |
| support resistance | 8.5 |
| 52w position | 2.1 |
Risk (lower is worse)
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.7 |
| days to cover | 7.5 |
| volatility | 3.1 |
| put call | 8.7 |
| implied vol | 3.2 |
| max pain risk | 3.0 |
| beta | 10.0 |
| debt equity | 3.5 |
- ▸High IV: 61%
- ▸Above max pain $20
- ▸Concentration risks: 1 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 5.0 |
| dividend safety | 7.0 |
| news activity | 5.0 |
- ▸Perfect beat streak: 4Q
- ▸Dividend: 199.0%
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (6)
- ASYMMETRY:3.4>=1.5
- INSIDER:OK
- 8K:CLEAN
- EARNINGS_PROXIMITY:40d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:1.1<4.5
- DEATH_CROSS:HARD_BLOCK
Warning (0)
none
Reward-to-Risk
3.37
Upside
+25.3%
Downside
7.5%
Sizing output
AVOID
SetupFALLING_KNIFE — Death cross, below all MAs, RSI 31, MACD bearish
EdgeNO_EDGE — No clear edge identified
SuitabilityAGGRESSIVE — MCap $4.2B<$5B
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Value at 9.0 could not lift the engine output above the verdict floor. Failed gate signal: MOMENTUM:1.1<4.5.
The strongest dimensions are Value at 9.0, Sentiment at 6.9, and Technical at 6.7; the weakest are Growth at 0.8, Momentum at 1.1, and Quality at 3.9. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of 3.37 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1All four of the most recent quarterly reports delivered positive earnings surprises, with the most recent quarter coming in at $0.96 against a $0.91 estimate and an average beat of roughly 5% across the streak — a consistent track record of under-promising and over-delivering on quarterly expectations.
Trip ifEPS surprise falls below 0% for 2 consecutive quarterly reports.
- P2The US government accounts for 57% of revenue, meaning that budget sequestration, contract re-bids, or shifts in federal spending priorities could materially impair more than half of the company's top line with limited near-term recourse.
Trip ifNon-government revenue rises above 50% of total revenue in any annual or semi-annual disclosure.
- P3The stock trades at a forward price-to-earnings multiple of 8.4 times with a PEG ratio of 0.54, and consensus analyst targets imply 16.4% upside from the current price — a combination that is inexpensive relative to the earnings trajectory even given the quality concerns.
Trip ifForward P/E multiple expands above 15x with no corresponding increase in consensus earnings estimates.
- P4Financial health as measured by the Piotroski framework scores 3 out of 9 — a weak reading — free cash flow is running at only 62% of net income raising an earnings quality concern, and there is no identified competitive moat, collectively leaving business quality at the minimum threshold.
Trip ifPiotroski F-Score rises above 6 for 2 consecutive reporting periods.