Thomas Cloud, Jr.'s  Instablog

KBR, Inc. operates as an engineering, construction, and services company supporting the energy, petrochemicals, government services, and industrial and civil infrastructure sectors worldwide. If you believe, like me, that oil is at least not going too much lower from where it is now then KBR stands to continue to profit. And continue really is the keyword.

I mean, heck if you like me, you probably just assumed every business was suffering this year. Not so. KBR made more money in the first quarter of 2009 than they did in 2008! "KBR&n... me a job", you say.  

Let's break KBR down a little bit and see how it stacks up.

Fundamentals

Not so good with the free cash flow generation and growth. However they do have efficient management of working capital and they also operate well under pressure by having a positive track record of beating EPS estimates. Their operating income to relative to market value, balance sheet valuation, and recent purchases from insiders looks strong.

Technically

KBR just crossed above its 200 day moving average.

Analyst Opinions

Broadpoint AmTech analyst Will Gabrielski raised his profit estimate for KBR, upgraded the engineering and construction firm to "Buy" from "Neutral" and raised his price target to $21 from $13. KBR closed 5/28 at $18.33.

Against the Competition

The return on equity for KBR is 22.77% against the construction and engineering average of 10.81%. Additionally the P/E is 10.15 against the industry average of 13.4. I moved my clients into this stock when it was $14.63.

Disclosure: Long KBR

Michael Baker Corporation (BKR) actually made money in the first quarter this year. $7.8 million was their reported net income. Michael Baker Corporation provides engineering and energy services to public and private sector clients worldwide through its
operating subsidiaries. The Energy segment provides a range of services to operating energy production facilities worldwide. With the world governments lowering interest rates and printing money the price of energy is likely to rise. Because this company provides energy services I suspect they will benefit from a rise in oil prices.

Fundamentally

The company has a good free cash flow generation and growth, efficient mangement of woring capital, and a positive operating income relative to marekt valuation.

Technically

The company is trading above its 200 day moving average.

Sentiment Measured by Price to Earnings (ttm)

The P/E ratio for BKR, according the Yahoo! Finance, is 11.02, which is lower than the S&P 500's 11.98.

Recent brokerage analyst sentiment change

On Wednesday, May 27th Zacks Investment Research upgraded Michael Baker Corp. (BKR) to "#1 company rank".

Currently Michael Baker is trading at $38.25. My clients bought this stock for around $25. However, even at $38.25 BKR looks better than the average stock in the S&P 500.

Disclosure: Long BKR.

[The above represents the opinion and analysis of Mr Cloud, based on data available to him, at the time of writing. Mr Cloud's opinions are his own, and are not a recommendation or an offer to buy or sell securities.

Mr Cloud is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in this report. As trading and investing in any financial markets may involve serious risk of loss, Mr Cloud recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications.

Therefore Mr Cloud’s opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.]