KBR
KBR, Inc.
$33.46
Platform & Compounding FCF
70%
Two-stage FCF DCF
Moderate
·
Conviction
Fair Value
Trading 15.1% below fair value
You pay
$33.46
Bear
$31.42
Fair
$39.40
Bull
$46.50
Bear
$31.42
-6.1%
3% stage 1 growth, 11% discount
Fair
$39.40
+17.8%
5% stage 1 growth, 11% discount
Bull
$46.50
+39.0%
6% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (5% base case)
Terminal Value % of EV
34%
Implied Market Multiple
14.2x
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $48.67 from 31 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $39.40 per share.
Warnings
Wall Street's average price target is $48.67 (from 31 analysts). Our estimate is 27% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions