Analyzing KBR (KBR) and Sterling Construction (STRL)

KBR (NYSE: KBR) and Sterling Construction (NASDAQ:STRL) are both construction companies, but which is the superior stock? We will compare the two businesses based on the strength of their risk, earnings, analyst recommendations, institutional ownership, profitability, dividends and valuation.

Risk & Volatility

KBR has a beta of 1.1, indicating that its stock price is 10% more volatile than the S&P 500. Comparatively, Sterling Construction has a beta of 0.46, indicating that its stock price is 54% less volatile than the S&P 500.

Profitability

This table compares KBR and Sterling Construction’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
KBR 13.04% 19.32% 5.74%
Sterling Construction 1.59% 13.26% 4.14%

Institutional & Insider Ownership

96.5% of KBR shares are owned by institutional investors. Comparatively, 77.2% of Sterling Construction shares are owned by institutional investors. 0.8% of KBR shares are owned by company insiders. Comparatively, 5.2% of Sterling Construction shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Dividends

KBR pays an annual dividend of $0.32 per share and has a dividend yield of 1.8%. Sterling Construction does not pay a dividend. KBR pays out 21.5% of its earnings in the form of a dividend.

Valuation & Earnings

This table compares KBR and Sterling Construction’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
KBR $4.17 billion 0.62 $434.00 million $1.49 12.26
Sterling Construction $957.96 million 0.38 $11.61 million $0.55 24.71

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

Analyst Recommendations

This is a summary of recent recommendations for KBR and Sterling Construction, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
KBR 0 3 4 0 2.57
Sterling Construction 0 0 2 0 3.00

KBR presently has a consensus target price of $19.67, indicating a potential upside of 7.70%. Sterling Construction has a consensus target price of $15.00, indicating a potential upside of 10.38%. Given Sterling Construction’s stronger consensus rating and higher probable upside, analysts clearly believe Sterling Construction is more favorable than KBR.

Summary

KBR beats Sterling Construction on 11 of the 16 factors compared between the two stocks.

KBR Company Profile

KBR, Inc. provides professional services and technologies across the asset and program life-cycle within the government services and hydrocarbons industries worldwide. The company operates through three segments: Government Services, Technology & Consulting, and Engineering & Construction. The Government Services segment offers 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. This segment's services include research and development, test and evaluation, program management and consulting, operational and platform support, logistics and facilities, training, and security. The Technology & Consulting segment provides proprietary technology that focuses on the monetization of hydrocarbons primarily natural gas and natural gas liquids, as well as ethylene and petrochemicals; ammonia, nitric acid and fertilizers; oil refining; gasification; oil and gas consulting; integrity management; naval architecture and proprietary hulls; and downstream consulting. The Engineering & Construction segment offers engineering, procurement, and construction (EPC) solutions for onshore oil and gas; LNG (liquefaction and regasification)/gas to liquids; oil refining; petrochemicals; chemicals; fertilizers; and offshore oil and gas, including shallow-water, deep-water, and subsea. This segment also provides floating solutions, including floating production units; floating production, storage, and offshore; floating liquefied natural gas; and floating storage and regasification units, as well as differentiated EPC, program management, and maintenance services. KBR, Inc. was founded in 1901 and is headquartered in Houston, Texas.

Sterling Construction Company Profile

Sterling Construction Company, Inc., together with its subsidiaries, operates as a heavy civil and residential construction company in Arizona, California, Colorado, Hawaii, Nevada, Texas, Utah, and other states in the United States. The company's Heavy Civil Construction segment undertakes heavy civil construction projects, including highways, roads, bridges, airfields, ports, light rail, water, wastewater and storm drainage systems, foundations for multi-family homes, commercial concrete projects, and parking structures. This segment primarily serves the departments of transportation in various states, regional transit authorities, airport authorities, port authorities, water authorities, and railroads, as well as commercial construction customers. Its Residential Construction segment undertakes construction projects, such as concrete foundations for single-family homes. This segment serves home builders. The company was formerly known as Oakhurst Company, Inc. and changed its name to Sterling Construction Company, Inc. in November 2001. Sterling Construction Company, Inc. was founded in 1955 and is headquartered in The Woodlands, Texas.

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