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KBR, Inc. (KBR) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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KBR, Inc. (KBR)

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Intrinsic Value (DCF)

Current$44.98
→
Intrinsic$48.43
+8%
$26.83$48.43$89.46
Market implies 13% growth for 5 years
KBR appears fairly valued — current price aligns with our DCF estimate.
At $45, the market prices in 13% annual cash flow growth — a moderate expectation aligned with historical trends (15%).
Range: Bear $27 → Bull $89. Current price implies expectations below the base case, but well above the bear case.
Discount ↓Growth →11%13%15%17%
8%$62$69$77$85
10%$38$43$48$54
12%$25$29$33$37
14%$17$19$23$26

Bull Case

  • Bull case ($89) offers 99% upside at 17% growth, 9% discount
  • 7% margin of safety vs. base case estimate
  • Market-implied growth (13%) ≤ historical CAGR (15%)

Bear Case

  • Bear case ($27) implies 40% downside at 12% growth, 12% discount
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5-Year Free Cash Flow Projection

Year 1$441.00M
Year 2$505.14M
Year 3$578.61M
Year 4$662.76M
Year 5$759.15M
Terminal$11.17B

📐 Model Inputs

Growth Rate14.5%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$385.00MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is KBR stock undervalued or overvalued?
🟡 FAIRLY VALUED

KBR trades at $44.98, within 10% of our $48.43 intrinsic value estimate. At 10.0% WACC and 14.5% FCF growth, the market is pricing in assumptions roughly aligned with the 5-year historical CAGR. The valuation range spans $26.99 (bear) to $78.74 (bull).

What is KBR's intrinsic value?

Using a 5-year DCF model: Base FCF of $385M, projected at 14.5% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $2.62B net debt and dividing by 0.13B shares: Bear $26.99 | Base $48.43 | Bull $78.74. Current price $44.98 implies +13% to base case.

How is KBR's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 14.5% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($9.11B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 23.7x.