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Financial
Analysis
o f
K BR
Kellog
Brown
and
Root
(KBR)
is
a
former
subsidiary
of
Halliburton
Corp
b ased
out
of
Houston,
TX,
and
is
currently
one
of
the
leading
global
engineering
and
construction
firms
in
the
m arket.
KBRs
statements
of
income
show
a
$434
million,
or
a
286%
increase
in
operating
income
since
the
base
year
( 2006),
roughly
twice
the
percentage
increase
in
the
previous
year
( 145%).
Net
income
h owever,
only
increased
by
90%,
reflecting
KBRs
increased
cost
of
services.
A
vertical
analysis
of
the
statements
of
income
shows
that
operating
cost
w ere
96.3%
of
total
r evenue
in
2008
and
97.8%
in
2007.
Cash
and
Equivalents
decreased
by
38%
on
the
balance
sheet
between
2007
and
2008,
with
total
receivables
increasing
by
only
23%,
reflecting
the
86%
decrease
in
cash
flows
from
the
base
year.
Noncurrent
employee
compensation
and
benefits
however,
increased
by
$324
million,
or
410%,
along
with
total
current
liabilities,
w hich
increased
by
$420
million
to
$3043
million.
Stock
based
compensation
decreased
by
only
6%
for
2008
from
the
base
year;
29%
less
than
the
35%
decrease
from
2006
to
2007,
suggesting
that
the
2006-2007
decrease
m ay
have
been
an
outlier.
Payments
of
dividends
to
minority
shareholders
increase
by
1067%
from
2006
to
2007,
and
833%
from
2006
to
2008.
The
dividend
yield
rate
h owever,
w as
still
only
.01.
Net
income
per
share
was
$1.92
in
2008,
and
$1.2
in
2007,
up
60%
and
50%
from
the
base
year,
respectively.
Return
on
equity
was
reported
at
.15,
and
P/E
was
9.90
meaning
that
the
buyer
is
p aying
$9.90
for
every
d ollar
expected
to
be
earned
and
can
be
considered
an
average
value.
The
receivables
turnover
was
5.39,
indicating
that
net
income
has
a
higher
contribution
from
cash
than
from
receivables.
The
debt-to-equity
ratio
was
fairly
l ow
however,
at
1.88.
This
means
that
the
firm
has
a
higher
proportion
of
liabilities
to
shareholders
equity,
which
is
a
risk
in
the
long
run.
When
comparing
KBRs
ratio
analysis
to
that
of
the
engineering
and
construction
industrys
l eading
firm,
Fluor,
there
are
two
values
that
stand
out.
KBRs
ROE
(.15)
doesnt
is
significantly
lower
than
Fluors
(140.36),
and
Fluors
receivables
turnover
is
also
m uch
h igher
at
18.
Based on KBRs increasingly high liabilities and decreasing cash flow I w ould refrain from l ong-term investment in KBR stock. However, its h igh net income is attractive and would make for p rofitable short-term trading.
Liabilities, Minority Interest and Shareholders' Equity Accounts payable 1387 Advance billings on uncompleted contracts 519 Reserve for estimated losses on uncompleted co 76 Employee compensation and benefits 320 Other current liabilities 680 Total current liabilities 3043 Noncurrent employee compensation and benefit 403 Other noncurrent liabilities 333 Total liabilities 3850 Paid-in capital CS in excess of par 2091 Accumulated and other comprehensive loss -439 Retained earnings 596 Total shareholders' equity and accumulated othe 2052 Total liabilities, minority interest and shareholde 5884
1117 794 117 316 262 2623 79 151 2968 2070 -122 319 2267 5203
% change 08
% change 07 vertical analysis 2008 (%) vertical analysis 2007 (%) 100 95.32855539 5.060012089 4.904585096 2.659528538 2.7545117 0.016578879 0.016492531 100 97.78986346 4.30455913 3.957417265 2.105993983 3.494561444 0.020828512 0.020712798
31.52754117 -1.851220897 27.58580839 -2.33445048 285.5263158 144.7368421 343.75 167.1875 470.3703704 237.037037 89.88095238 79.76190476 60 50 59.16666667 49.16666667 18.57142857 20 19.28571429 20.71428571
% change 08
-38.47393874 22.89639382 2.120315582 11.36363636 176.4940239 386.6666667 -37.07482993 20.14388489 -31.63265306 12.31981549
24.17188899 -34.63476071 -35.04273504 1.265822785 159.5419847 16.01219977 410.1265823 120.5298013 29.71698113 1.014492754 259.8360656 86.8338558 -9.483899427 13.08860273
319 124 -37 7 -556 3 -28 -244 -40 -716 1861 1145 200
302 248 -43 3 293 6 -35 -150 9 400 1461 1861 229
80.49363057 42.8343949 -5.882352941 -35.29411765 89.88095238 79.76190476 -98.72611465 200 14.3812709 26.36566332
% change 08
% change 08
89.88095238 79.76190476 -86.68098818 -73.36197637 -35.0877193 -24.56140351 16.66666667 -50 -347.1111111 30.22222222 -99.4140625 833.3333333 75.53956835 -98.828125 1066.666667 7.913669065
-180 -82 -167.10403 -62.51171509 372.3350254 270.8121827 -21.62902122 27.37850787 250.877193 301.754386
19.03 1.92
9.91145833
319000000 2061000000
302000000 2127000000
0.15477923
0.14198402
319000000 169709601
302000000 169709601
1.87968152
1.7795104
0.2146 19.03
0.01127693
Recievables turnover Net revenue 11581000000 /Average accounts rec 2147000000 Debt-to-equity ratio Total liabilities /Total shareholders' e Fluor Pric/earnings (P/E/) ratio Market price per shar /Earnings per share Return on equity Net income /Average stockholders Earnings per share Net income preferre /Average number of o Dividend yield rate Dividends per share /market price per sha Recievables turnover Net revenue /Average accounts rec Debt-to-equity ratio
8642000000 1747000000
5.39403819
4.94676588
3850000000 2052000000
2968000000 2267000000
1.87621832
1.30921923
50.25 3.93
12.7862595
720460000 2272770.5
316.996371
720460000 181,555,921
3.96825395
0 50.25
22,325,894 1,227,224
18
1.40491344