Is There Now An Opportunity In KBR, Inc. (NYSE:KBR)?

While KBR, Inc. (NYSE:KBR) might not have the largest market cap around , it received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$69.36 at one point, and dropping to the lows of US$60.85. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether KBR's current trading price of US$64.66 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at KBR’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for KBR

Is KBR Still Cheap?

KBR appears to be expensive according to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that KBR’s ratio of 43.45x is above its peer average of 28.18x, which suggests the stock is trading at a higher price compared to the Professional Services industry. In addition to this, it seems like KBR’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

What kind of growth will KBR generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to more than double over the next couple of years, the future seems bright for KBR. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? It seems like the market has well and truly priced in KBR’s positive outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe KBR should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on KBR for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for KBR, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about KBR as a business, it's important to be aware of any risks it's facing. For example, KBR has 3 warning signs (and 1 which is a bit unpleasant) we think you should know about.

If you are no longer interested in KBR, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.