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KBR to Acquire LinQuest for $737M, Fortifies Technology Business

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In a bid to expand opportunities for revenue growth and meet customer and market demands, KBR, Inc. (KBR - Free Report) recently inked a deal to acquire an engineering, data analytics and digital integration company — LinQuest Corporation.

The acquisition is expected to be accretive to adjusted earnings per share (EPS) (excluding amortization from purchased intangible assets and non-recurring transaction costs) and is unanimously approved by the KBR board of directors. The deal is worth $737 million, inclusive of modest expected tax benefits and is subject to certain regulatory approvals prior to closing by the second half of 2024.

LinQuest has a legacy of solving complex technical challenges for national security missions with advanced technology solutions across space, air dominance and connected battlespace missions, including advanced AI and machine learning capabilities. LinQuest is one of the top-rated companies that supports the U.S. Space Force, U.S. Air Force and other U.S. Department of Defense and intelligence agencies.

The acquisition will accelerate KBR's strategy of furthering the delivery of high-end technology, expertise and mission capabilities. Both companies have highly complementary capabilities, creating synergies across the portfolio of solutions. Impressively, around 74% of LinQuest's employees hold security clearances, which will help KBR serve strategic U.S. government clients to meet the demands of the rapidly changing defense and national security sector.

Price Performance

Shares of this Zacks Rank #3 (Hold) company have gained 7.3% in the past three months compared with the Zacks Engineering - R and D Services industry’s 21.8% growth. Although shares of the company have underperformed the industry, the ongoing contract wins are likely to boost its prospects in the forthcoming quarters. KBR’s earnings estimate for 2024 reflects 10.7% year-over-year growth on a 9.3% increase in revenues.

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KBR’s focus on a resilient business model and efficiency-boosting initiatives have sparked its project-winning momentum. Heightening focus on national security on a global scale, energy security, energy transition and climate change are a major tailwind.

In first-quarter 2024, KBR received $1.9 billion in bookings and options in highly strategic areas, with a trailing 12-month book-to-bill of 1.1X.

As of Mar 29, 2024, the total backlog (including award options of $3.596 billion) was $20.8 billion compared with $21.73 billion at 2023-end. Of the total backlog, Government Solutions booked $12.89 billion. The Sustainable Technology Solutions segment accounted for $4.36 billion of the total backlog.

Zacks Rank & Key Picks

Currently, KBR carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Zacks Construction sector are:

Fluor Corporation (FLR - Free Report) currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

FLR delivered a trailing four-quarter earnings surprise of 51.3%, on average. The Zacks Consensus Estimate for FLR’s 2024 sales and EPS indicates growth of 14.3% and 5.5%, respectively, from the prior-year levels.

Great Lakes Dredge & Dock (GLDD - Free Report) currently carries a Zacks Rank of 2 (Buy). It has a trailing four-quarter earnings surprise of 184.3%, on average.

The consensus estimate for GLDD’s 2024 sales and EPS implies increases of 26.7% and 414.3%, respectively, from the prior-year reported levels.

Dycom Industries (DY - Free Report) currently holds a Zacks Rank of 2.

DY delivered a trailing four-quarter earnings surprise of 30.2%, on average. The Zacks Consensus Estimate for DY’s fiscal 2025 sales and EPS indicates an improvement of 10.2% and 8.1%, respectively, from a year ago.

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