r/wallstreetbets Mar 8, 10:07 PM
$KBR : 50% upside, spinoff in 6 months, $72K on the table First real DD post in here, giving jam to the pigs as we say in my country. English is not my first language so I used Claude to make it readable. Position for crayon eaters, TLDR for the reading-capable, and the rest for those with a high-end attention span relative to the regular degen in here. All references are at the end.
TLDR
$KBR at $40. Analyst consensus $54-67. Strong Buy. Zero sell ratings.
The $900M HomeSafe hit is already in every model. The stock is cheap because it looks bad on a revenue chart.
Q4: EPS beat, margins +190bps, record $23.2B backlog, 76% of 2026 revenue locked in, $557M OCF.
$3.5B+ in new contracts in the first 9 weeks of 2026.
EPS growing 13-24% per year through 2028. P/E drops to 7x at current price. Sector average 40x+. Spinoff of MTS in mid-to-late 2026. Activist-backed. Form 10 filed. Conglomerate discount goes away.
Maintained major US government contracts across 6 presidents, both parties, through criminal fines, fraud settlements and contract failures.
Risks: execution history is real, SpinCo CEO search ongoing, Lake Charles LNG pause, class action manageable. -20% return YTD, underperformed the market by 40% YTD.
1800 shares @ $40 avg. Putting my money where my mouth is. For bottom chasers it might dip to $35-37 with this shitty macro but the boat is sailing soon on this one. Bogglehead can wait for next ER 05/05 to confirm the business is fine and the backlog is already maxed out.
Not financial advice.
https://preview.redd.it/zv2a47iz9wng1.png?width=1220&format=png&auto=webp&s=6f0847d96e32382b35577e64275590e398031967
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What is KBR
KBR (formerly Kellogg Brown & Root) is an engineering and government services company. Two segments.
Mission Technology Solutions (MTS): Defense, space, intelligence, government IT. AI systems for the
Air Force, logistics for the Army, spacecraft engineering for NASA. About 75% of revenue.
Sustainable Technology Solutions (STS): LNG technology, ammonia plants, clean refining. They helped engineer roughly a third of global LNG production capacity. About 25% of revenue.
$7.8B in annual revenue, 37,000 employees, 30+ countries.
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Why it's cheap
In 2022 KBR won a contract called HomeSafe to manage military family relocations across the US. They couldn't execute it. In June 2025 the Pentagon cancelled it. Stock fell from $72 to the low $40s and has sat there since.
The contract had basically no profit margin. KBR said so in the termination announcement: the cancellation was "not expected to have a material effect" on 2025 adjusted EBITDA. They cut revenue guidance by $900M and left EBITDA and EPS guidance untouched. The $900M was mostly empty revenue.
That $900M is already in every analyst's model. The consensus fair value of $54-67 already assumes HomeSafe is permanently gone. The stock is cheap because it looks bad on a revenue chart, not because there's live unpriced risk under it.
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Q4 2025 earnings