Amentum Holdings, Inc. (AMTM) AI Stock Analysis

• Market Cap: $5.59B
• Dividend Yield: N/A
• Average Volume (3M): 2.41M
• Price to Earnings (P/E): 336.6
• Beta (1Y): 1.08
• Revenue Growth: N/A
• EPS Growth: N/A
• Country: US
• Employees: 53,000
• Sector: Industrials
• Sector Strength: 87
• Industry: Software - Services
• EPS (TTM): 0.53
• Shares Outstanding: 243,322,460
• 10 Day Avg. Volume: 3,522,431
• 30 Day Avg. Volume: 2,414,685
• PEG Ratio: 0.60
• Price to Book (P/B): 2.20
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 66.48
• Enterprise Value/Market Cap: 1.27
• Enterprise Value/Revenue: 0.19
• Enterprise Value/Gross Profit: 6.22
• Enterprise Value/Ebitda: 3.96
• 1Y Price Target: $25.43
• Price Target Upside: 12.08% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 8

• Rating: 67 Neutral
• Price Target: $23.00 ▲(1.37%Upside)

Amentum Holdings, Inc. demonstrates strong financial performance and strategic growth through significant contract wins and divestiture efforts. However, profitability challenges and high leverage, along with an overvalued stock price, present risks. Positive market momentum and earnings call insights contribute to a solid outlook, offset by valuation concerns.

Positive Factors

Backlog and sales coverage

AMTM’s backlog is now ~$45bn, reflecting >3x sales coverage, which generally bodes well for the longer-term growth outlook.

Debt reduction strategy

Amentum expects to use the $325mn in expected after-tax proceeds to accelerate debt paydown, which in turn should reduce interest expense and drive profitability.

Long-term growth potential

Opportunities from the Space Force, such as the recent $4bn 10-yr win, provide some insulation and long-term upside potential.

Negative Factors

Financial performance risks

AMTM has weaker free cash flow compared to peers, driven by lower profit margins and higher net leverage.

Growth limitations

High leverage and a slow award environment limit their growth opportunities.

Revenue risks

Amentum expects a $200mn topline headwind due to a shift in JV accounting.

Amentum Holdings, Inc. Business Overview & Revenue Model

Company Description

Amentum Holdings, Inc. provides mission-critical, technology-driven services in government and commercial markets. It operates through two operating segments: Critical Mission Solutions and Cyber & Intelligence. The Critical Mission Solutions segment provides test, training, and operations services for missile defense systems, IT and engineering services to defense clients and the space sector, technological solutions, including installations, decommissioning, and environmental remediation to energy clients, and other highly technical consulting solutions. The Cyber & Intelligence segment provides advanced cyber training and data analytics for government professionals, advanced communication systems and aerial mapping technologies to national security clients, and other technical services for United States defense and intelligence clients. The company was founded on November 26, 2019 and is headquartered in Chantilly, VA.

How the Company Makes Money

Amentum Holdings, Inc. generates revenue through its comprehensive suite of services offered to government agencies and commercial enterprises. The company's primary revenue streams include contracts for technical and engineering services, which involve long-term government contracts, particularly with the U.S. Department of Defense and other federal agencies. These contracts often encompass project management, logistics, systems engineering, maintenance, and operational support. Amentum's earnings are bolstered by its strategic partnerships and joint ventures, which facilitate access to a broader client base and enhance its capabilities in delivering large-scale projects. Additionally, the company's focus on critical infrastructure and energy sectors contributes to its revenue through specialized services in environmental management, nuclear remediation, and energy transformation projects.

Amentum Holdings, Inc. Financial Statement Overview

Summary

Amentum Holdings, Inc. shows robust revenue growth and a strong equity position but faces challenges in profitability and leverage. The company's ability to generate cash flow remains a concern, though it has made improvements in free cash flow management. Future performance will depend on addressing profitability and leveraging cash flow effectively.

Income Statement

Amentum Holdings, Inc. has demonstrated strong revenue growth of 6.64% from the previous year, suggesting a positive trajectory in sales. However, the net profit margin is negative due to a loss of $82 million, indicating challenges in profitability. The gross profit margin remains relatively stable at 9.51%, and the EBITDA margin at 6.75% shows moderate operating efficiency.

Balance Sheet

The company has a strong equity base with an equity ratio of 37.26%, suggesting a balanced capital structure. However, a high debt-to-equity ratio of 1.11 indicates significant leverage, which could pose risks in adverse market conditions. ROE is negative due to net losses, pointing to challenges in generating returns for shareholders.

Cash Flow

Operating cash flow decreased compared to the previous year, impacting the cash flow stability. The free cash flow to net income ratio is negative due to net losses, but the company generated positive free cash flow of $36 million, demonstrating some ability to manage cash despite negative net income.

Breakdown
TTM	Sep 2024	Sep 2023	Sep 2022
Income Statement		Total Revenue
12.51B	8.39B	7.87B	7.68B
	Gross Profit
1.14B	798.00M	782.00M	771.00M
	EBIT
354.00M	291.00M	57.00M	121.00M
	EBITDA
463.00M	566.00M	382.00M	381.00M
	Net Income Common Stockholders
-97.00M	-82.00M	-313.70M	-84.42M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
546.00M	452.00M	305.00M	207.00M
	Total Assets
12.00B	11.97B	6.41B	4.22B
	Total Debt
43.00M	4.94B	4.33B	121.00M
	Net Debt
-503.00M	4.49B	4.03B	-86.00M
	Total Liabilities
7.42B	7.42B	6.00B	919.00M
	Stockholders Equity
4.43B	4.46B	374.24M	3.26B
Cash Flow		Free Cash Flow
53.00M	36.00M	55.00M	108.00M
	Operating Cash Flow
66.00M	47.00M	67.39M	126.02M
	Investing Cash Flow
447.00M	475.00M	-17.00M	-1.79B
	Financing Cash Flow
-292.00M	-382.00M	-112.00M	1.72B

Amentum Holdings, Inc. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
KTOS	74 Outperform	$6.33B	330.64	1.45%	―	7.32%	―
MOG.A	73 Outperform	$5.73B	28.14	11.61%	0.64%	4.50%	9.90%
FLR	70 Outperform	$7.95B	4.62	66.58%	―	7.16%	523.56%
AMTM	67 Neutral	$5.59B	336.65		―	―	―
Sector *	66 Neutral	$4.47B	12.22	5.40%	3.65%	4.14%	-12.00%
MRCY	58 Neutral	$3.17B	―	-4.45%	―	5.66%	52.71%
SPR	37 Underperform	$4.32B	―	81.63%	―	-2.91%	-109.95%