KBR, Inc. (KBR Quick QuoteKBR - Free Report) has been gaining from broad-based growth across its business segments, courtesy of its high-end and differentiated government business work, strong margin performance, and technology and consulting services. The increasing platform of long-term, buoyant, mission-critical programs provides strong visibility in volatile times.

This engineering, construction and services firm’s determination to lower emissions, product diversification, energy efficiency, and more sustainable technologies and solutions have been driving its performance. Shares of KBR have risen 17.8% over the past year, against the Zacks Engineering - R and D Services industry’s 10% decline.

The 2022 earnings estimate for this Zacks Rank #2 (Buy) company has moved upward to $2.61 per share from $2.54 over the past 60 days. This positive trend reflects bullish analyst sentiment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Let’s delve deeper and find out the factors that should drive growth further.

Government Solutions Business – Growth Driver

The company’s Government Solutions unit (accounting for almost 84% of revenues) has been performing well, courtesy of on-contract growth in logistics and engineering, take-away wins along with new work awarded under the company’s portfolio of well-positioned contracting vehicles and increased outsourcing of sustainment activities by the military. KBR is a leader in advancing air, space, cyber and missile defense systems for the U.S. military.

 KBR expects growth across all its key markets in the United States, the UK and Australia, driven by continued opportunities across the lifecycle of projects. Revenues in the Government Solutions segment increased 25.3% year over year to $1,459 million in first-quarter 2022. This business booked $11.57 billion of backlog at first-quarter end, thereby signaling strong visibility.

Robust Technology Support

For more than five decades, KBR has been leading the process technology development, commercialization and the plant design solutions industry. Its best-in-class technologies have been designing and building end-to-end sophisticated digitization solutions and services for clients worldwide. Overall, it has been driving growth by focusing on lowering carbon emissions, product diversification, energy efficiency, and more sustainable technologies and solutions.

These digitized technologies and solutions help companies increase efficiency and productivity, reduce costs and create opportunities to generate higher revenues and profitability.

The company’s adjusted earnings of 62 cents per share in the first quarter increased 29% from a year ago due to the above-mentioned tailwinds.

Systematic Inorganic Moves

KBR has a penchant for acquisitions and strategic alliances for bolstering its inorganic growth and expanding market share. Recently, KBR has agreed to acquire a UK-based digital transformation company, VIMA Group, for up to £75 million. This addition would strengthen KBR’s offerings in digital and information technology services for defense sector clients. VIMA Group offers solutions across a number of large-scale, high-priority digital transformation programs to support its clients, including defense and other public sector firms. It ensures the availability of effective digital and information technology services as guided by UK's Digital Strategy for Defence.

In October 2021, KBR acquired a leading provider of high-end systems engineering, assurance and technology advisory services, Frazer-Nash. The addition of Frazer-Nash, which serves across the defense, renewable energy and critical infrastructure sectors, primarily in the U.K. and Australia, will complement KBR's global priorities with minimal overlap because of its geographic footprint.

The company’s adjusted EBITDA increased 14.1% year over year to $154 million in the first quarter, driven by a strong performance of the Government Solutions business, acquisitions and solid project execution.

Solid ROE

KBR’s superior return on equity (ROE) is also indicative of its growth potential. The company’s ROE currently stands at 23.1%, which is higher than the industry’s 10.7%. This indicates efficiency in using shareholders’ funds and the ability to generate profit with minimum capital usage.

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Sterling Construction Co., Inc. (STRL Quick QuoteSTRL - Free Report) , a Zacks Rank #2 company, has been benefiting from broad-based growth across the E-Infrastructure, Building and Transportation solutions segments.

The consensus mark for Sterling’s 2022 earnings rose to $2.88 per share from $2.80 in the past 60 days. This suggests 34% year-over-year growth.

KBR, Inc. (KBR Quick QuoteKBR - Free Report) , a Zacks Rank #2 company, is a global engineering, construction and services firm, supporting the market segments of global energy and international government services.

KBR has seen an upward estimate revision from $2.54 to $2.61 per share for the 2022 bottom line in the past 60 days. This suggests 7.9% year-over-year growth.