Comparing VSE (NASDAQ:VSEC) & KBR (NYSE:KBR)

VSE (NASDAQ:VSEC) and KBR (NYSE:KBR) are both mid-cap construction companies, but which is the better stock? We will compare the two businesses based on the strength of their institutional ownership, risk, valuation, earnings, analyst recommendations, profitability and dividends.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
VSE	1.94%	7.25%	4.14%
KBR	4.52%	33.65%	7.33%

Volatility & Risk

VSE has a beta of 1.4, meaning that its stock price is 40% more volatile than the S&P 500. Comparatively, KBR has a beta of 0.68, meaning that its stock price is 32% less volatile than the S&P 500.

Dividends

VSE pays an annual dividend of $0.40 per share and has a dividend yield of 0.3%. KBR pays an annual dividend of $0.66 per share and has a dividend yield of 1.5%. VSE pays out 35.7% of its earnings in the form of a dividend. KBR pays out 23.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. KBR has increased its dividend for 6 consecutive years. KBR is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of current ratings and target prices for VSE and KBR, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
VSE	0	1	6	0	2.86
KBR	0	6	4	0	2.40

VSE currently has a consensus price target of $161.50, indicating a potential upside of 4.22%. KBR has a consensus price target of $62.78, indicating a potential upside of 44.95%. Given KBR’s higher probable upside, analysts clearly believe KBR is more favorable than VSE.

Valuation and Earnings

This table compares VSE and KBR”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
VSE	$1.08 billion	2.97	$15.32 million	$1.12	138.36
KBR	$7.74 billion	0.72	$375.00 million	$2.76	15.69

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

Institutional and Insider Ownership

91.5% of VSE shares are owned by institutional investors. Comparatively, 97.0% of KBR shares are owned by institutional investors. 2.3% of VSE shares are owned by insiders. Comparatively, 1.1% of KBR shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

KBR beats VSE on 11 of the 17 factors compared between the two stocks.

About VSE

VSE Corporation operates as a diversified aftermarket products and services company in the United States. The company operates through two segments, Aviation and Fleet. The Aviation segment provides aftermarket parts supply and distribution; maintenance, repair, and overhaul services for components and engine accessories supporting commercial, business, and general aviation operators. This segment serves commercial airlines, regional airlines, cargo transporters, MRO integrators and providers, aviation manufacturers, corporate and private aircraft owners, and fixed-base operators. The Fleet segment offers parts supply, inventory management, e-commerce fulfillment, logistics, supply chain support, and other services to support the commercial aftermarket medium- and heavy-duty truck market. This segment also provides sale of vehicle parts and supply chain services to support client truck fleets, as well as sustainment solutions and managed inventory services to government and commercial truck fleets. VSE Corporation was incorporated in 1959 and is headquartered in Alexandria, Virginia.

About KBR

KBR, Inc. provides scientific, technology, and engineering solutions to governments and commercial customers worldwide. It operates through Government Solutions and Sustainable Technology Solutions segments. The Government Solutions segment offers life-cycle support solutions to defense, intelligence, space, aviation, and other programs and missions for military and other government agencies in the United States, the United Kingdom, and Australia. Its services cover research and development, advanced prototyping, acquisition support, systems engineering, cyber analytics, space domain awareness, test and evaluation, systems integration and program management, global supply chain management, and operations readiness and support, as well as command, control, communications, computers, intelligence, surveillance, and reconnaissance services. This segment also provides various professional advisory services to the defense, renewable energy, and critical infrastructure sectors. The Sustainable Technology Solutions segment operates portfolio of various proprietary process technologies for ammonia/syngas, chemical/petrochemicals, clean refining, and circular process/circular economy solutions. This segment also provides synergistic services, including advisory and consulting focused on broad-based energy transition and net-zero carbon emission solutions; high-end engineering, design and program management centered around decarbonization, energy efficiency, environmental impact and asset optimization; and digitally-enabled operating and monitoring solutions. KBR, Inc. was founded in 1901 and is headquartered in Houston, Texas.