Critical Analysis: KBR (KBR) & EMCOR Group (EME)

EMCOR Group (NYSE: EME) and KBR (NYSE:KBR) are both mid-cap construction companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, earnings, dividends, risk, profitability, analyst recommendations and institutional ownership.

Analyst Ratings

This is a breakdown of current ratings and price targets for EMCOR Group and KBR, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
EMCOR Group 0 3 1 0 2.25
KBR 1 2 7 0 2.60

EMCOR Group presently has a consensus target price of $70.50, indicating a potential upside of 3.68%. KBR has a consensus target price of $18.67, indicating a potential upside of 4.87%. Given KBR’s stronger consensus rating and higher probable upside, analysts plainly believe KBR is more favorable than EMCOR Group.

Profitability

This table compares EMCOR Group and KBR’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
EMCOR Group 2.63% 13.19% 5.32%
KBR -0.81% 8.74% 1.89%

Insider and Institutional Ownership

93.5% of EMCOR Group shares are held by institutional investors. Comparatively, 99.7% of KBR shares are held by institutional investors. 2.0% of EMCOR Group shares are held by company insiders. Comparatively, 0.6% of KBR shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Dividends

EMCOR Group pays an annual dividend of $0.32 per share and has a dividend yield of 0.5%. KBR pays an annual dividend of $0.32 per share and has a dividend yield of 1.8%. EMCOR Group pays out 9.6% of its earnings in the form of a dividend. KBR pays out -128.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. KBR has increased its dividend for 5 consecutive years. KBR is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares EMCOR Group and KBR’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
EMCOR Group $7.66 billion 0.53 $425.32 million $3.33 20.42
KBR $4.46 billion 0.56 $9.00 million ($0.25) -71.20

EMCOR Group has higher revenue and earnings than KBR. KBR is trading at a lower price-to-earnings ratio than EMCOR Group, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

EMCOR Group has a beta of 0.89, indicating that its stock price is 11% less volatile than the S&P 500. Comparatively, KBR has a beta of 1.08, indicating that its stock price is 8% more volatile than the S&P 500.

Summary

KBR beats EMCOR Group on 10 of the 17 factors compared between the two stocks.

About EMCOR Group

EMCOR Group, Inc. is an electrical and mechanical construction, and facilities services firm in the United States. The Company provides building services and industrial services. Its segments are United States electrical construction and facilities services; United States mechanical construction and facilities services; United States building services; United States industrial services, and United Kingdom building services. As of December 31, 2016, its services were provided to a range of commercial, industrial, utility and institutional customers through approximately 75 operating subsidiaries and joint venture entities. It is providing construction services relating to electrical and mechanical systems in various types of non-residential and certain residential facilities, and in providing services relating to the operation, maintenance and management of facilities, including refineries and petrochemical plants. It operates various electrical and mechanical systems.

About KBR

KBR, Inc. is a provider of professional services and technologies across the asset and program life-cycle within the government services and hydrocarbons industries. The Company operates through business segments, including Technology & Consulting (T&C), Engineering & Construction (E&C), Government Services (GS), Non-strategic Business and Other. The T&C business segment combines KBR technologies, knowledge-based services and its three specialty consulting brands, Granherne, Energo and GVA, under a single customer-facing global business. The E&C business segment provides project and program delivery solution across the globe. The GS business segment provides life-cycle support solutions to defense, space, aviation and other programs and missions for government agencies in the United States, the United Kingdom and Australia. Its solutions include engineering services, mission and logistics support solutions, consulting, procurement, construction management and other support services.

Receive News & Ratings for EMCOR Group Inc. Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for EMCOR Group Inc. and related companies with MarketBeat.com's FREE daily email newsletter.

Latest News

Leave a Reply