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VSE Corporation (VSEC)
:VSEC
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VSE
(NASDAQ:VSEC)
Rating:74Outperform
Price Target:
$148.00
▲( 16.83% Upside)
Positive Factors
Business Model
Investors continue to highly value the company’s OEM-centric business model and alignment with strong aerospace aftermarket growth.
Earnings
VSE reported strong first-quarter results above consensus.
Mergers and Acquisitions
Expectation for accretive M&A activity, multiple expansion, and EBITDA growth suggests greater than 15% upside to shares.
Negative Factors
Integration Challenges
The TCI and Kellstrom engine aftermarket focused acquisitions ongoing integration dilutes margins in 1H25.
Margin Pressure
Integration synergies will then kick in in 2H:25 and carry into FY26.
VSE (VSEC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.62B
Dividend Yield0.32%
Average Volume (3M)282.51K
Price to Earnings (P/E)160.0
Beta (1Y)1.36
Revenue Growth19.84%
EPS Growth-51.67%
CountryUS
Employees1,400
SectorIndustrials
Sector Strength92
IndustryAerospace & Defense
Share Statistics
EPS (TTM)0.78
Shares Outstanding20,669,683
10 Day Avg. Volume235,171
30 Day Avg. Volume282,512
Financial Highlights & Ratios
PEG Ratio-56.14
Price to Book (P/B)2.20
Price to Sales (P/S)0.00
P/FCF Ratio-47.77
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$143.75Price Target Upside13.47% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering6
VSE Business Overview & Revenue Model
Company DescriptionVSE Corporation (VSEC) is a diversified products and services company serving various sectors including aerospace, defense, and federal and civilian markets. The company provides aftermarket distribution and maintenance, repair, and overhaul (MRO) services for land, sea, and air transportation assets. VSE's core products and services include supply chain management, logistics, engineering, and technical support services aimed at ensuring operational readiness for its clients.
How the Company Makes MoneyVSE Corporation generates revenue through a combination of service contracts, product sales, and long-term maintenance agreements. The company's key revenue streams include aftermarket distribution and supply chain management services, MRO services for aviation and other transportation assets, and engineering and technical support for defense and civilian agencies. VSE's business model relies heavily on its ability to secure government contracts and partnerships with major OEMs (Original Equipment Manufacturers), which contribute significantly to its earnings. Additionally, the company's focus on expanding its capabilities in high-growth markets, such as aviation, further supports its revenue generation strategy.
VSE Financial Statement Overview
Summary
VSE has demonstrated strong revenue growth and an improved equity position, indicating a positive trajectory in market presence and financial stability. However, the compression in profitability margins and ongoing cash flow challenges suggest potential liquidity issues which need addressing to ensure long-term sustainability.Income Statement
VSE has shown a robust increase in total revenue, growing from $860.5 million in 2023 to $1.08 billion in 2024, indicating a strong Revenue Growth Rate. However, the Net Profit Margin decreased slightly from 4.55% in 2023 to 3.38% in 2024, signaling potential challenges in maintaining profitability. Despite this, the EBIT Margin is relatively stable, showcasing operational efficiency.65
Positive
Balance Sheet
The company has improved its financial position significantly, with Stockholders' Equity increasing from $616.7 million in 2023 to $988.2 million in 2024. The Debt-to-Equity Ratio has improved, reflecting better leverage management. However, the Equity Ratio remains moderate, suggesting a balanced capital structure but with room for improvement in terms of asset financing through equity.70
Positive
Cash Flow
VSE exhibits a negative free cash flow as of 2024, with a figure of -$51.7 million, compared to -$40.5 million in 2023, indicating a decline in free cash flow generation. The Operating Cash Flow to Net Income Ratio is negative, highlighting challenges in converting earnings into cash. This could be a concern for liquidity and sustainability if it persists.50
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.08B | 860.49M | 949.76M | 750.85M | 661.66M | Gross Profit |
| 108.20M | 95.61M | 77.93M | 43.63M | 75.39M | EBIT |
| 81.42M | 88.00M | 55.13M | 21.52M | 54.76M | EBITDA |
| 81.42M | 111.41M | 78.21M | 21.52M | 78.90M | Net Income Common Stockholders |
| 15.32M | 39.13M | 28.06M | 7.97M | -5.17M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 29.03M | 7.77M | 478.00K | 518.00K | 378.00K | Total Assets |
| 1.73B | 1.35B | 999.79M | 918.56M | 780.08M | Total Debt |
| 78.14M | 459.26M | 325.89M | 317.73M | 277.92M | Net Debt |
| 49.11M | 451.49M | 325.42M | 317.21M | 277.54M | Total Liabilities |
| 746.43M | 733.61M | 550.26M | 501.23M | 423.76M | Stockholders Equity |
| 988.19M | 616.73M | 449.53M | 417.33M | 356.32M |
| Cash Flow | Free Cash Flow | |||
| -51.74M | -40.49M | -3.16M | -28.12M | 31.33M | Operating Cash Flow |
| -31.04M | -21.83M | 8.05M | -17.60M | 35.76M | Investing Cash Flow |
| -263.67M | -235.69M | -2.38M | -61.63M | 20.22M | Financing Cash Flow |
| 315.81M | 264.97M | -5.71M | 79.37M | -56.34M |
VSE Technical Analysis
Positive
126.68
Price Trends
119.29
Positive
111.49
Positive
104.87
Positive
Market Momentum
3.84
Positive
54.12
Neutral
9.16
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VSEC, the sentiment is Positive. The current price of 126.68 is above the 20-day moving average (MA) of 125.72, above the 50-day MA of 119.29, and above the 200-day MA of 104.87, indicating a bullish trend. The MACD of 3.84 indicates Positive momentum. The RSI at 54.12 is Neutral, neither overbought nor oversold. The STOCH value of 9.16 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for VSEC.
VSE Risk Analysis
VSE disclosed 21 risk factors in its most recent earnings report. VSE reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
VSE Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $1.01B | 29.04 | 5.25% | ― | 3.02% | 95.76% | |
74 Outperform | $2.62B | 160.00 | 4.83% | 0.32% | 19.84% | -51.67% | |
71 Outperform | $2.16B | 246.75 | -1.08% | ― | 21.07% | -120.95% | |
69 Neutral | $1.44B | 34.69 | 4.10% | ― | 7.38% | ― | |
64 Neutral | $4.39B | 11.81 | 5.20% | 249.39% | 3.96% | -12.36% | |
59 Neutral | $2.82B | ― | -4.45% | ― | 5.66% | 52.71% | |
54 Neutral | $1.99B | 284.07 | 46.74% | ― | -8.59% | ― |
* Industrials Sector Average
Performance Comparison
VSEC
VSE
126.68
49.47
64.07%
AIR
AAR
59.76
-11.04
-15.59%
DCO
Ducommun
67.74
10.10
17.52%
MRCY
Mercury Systems
47.20
15.94
50.99%
TGI
Triumph Group
25.68
11.67
83.30%
VVX
V2X
45.42
-0.53
-1.15%
VSE Earnings Call Summary
Earnings Call Date:May 06, 2025
(Q1-2025)
| % Change Since: 7.30%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Positive
The earnings call outlined significant achievements, including record revenue and strategic acquisitions, along with a solid financial position. However, the presence of global market uncertainties and potential macroeconomic pressures were noted as challenges. Despite these concerns, the highlights significantly outweigh the lowlights, indicating a strong performance and positive outlook.Q1-2025 Updates
Positive Updates
Record-Breaking Revenue and Profitability
VSE Corporation reported record revenue of $256 million for Q1 2025, a 58% increase year-over-year, and record profitability, with an adjusted EBITDA increase of 60% to $40 million.
Strategic Divestiture and Focused Business Approach
Completion of the sale of the fleet segment, allowing VSE to focus on higher growth and margin opportunities in the aviation aftermarket.
Acquisition of Turbine Weld Industries
VSE acquired Turbine Weld Industries for approximately $50 million, enhancing their position in the aviation engine aftermarket.
New Eaton Service Center Agreement
Signed a new five-year authorized service center agreement with Eaton, marking Eaton's first authorized service center collaboration.
Strong Balance Sheet and Financial Flexibility
Ended Q1 2025 with a pro forma adjusted net leverage ratio of 2.2 times, following the sale of the fleet business.
Negative Updates
Global Market Uncertainty Due to Tariff Policies
Broader global market uncertainties stemming from evolving tariff policies, although VSE has taken steps to mitigate impacts.
Potential Sensitivity to Macroeconomic Pressures
Concerns over potential slowdown in airline capacity and broader economic pressures, although current backlog and bookings remain strong.
Company Guidance
During the first quarter of 2025, VSE Corporation achieved record revenue of $256 million, marking a 58% increase year-over-year, driven by robust performance in its aviation distribution and MRO segments, as well as contributions from recent acquisitions. The company's adjusted EBITDA rose by 60% to $40 million, representing 15.8% of revenue, and adjusted net income reached $16 million, translating to $0.78 per diluted share, up 125% and 73% respectively from the previous year. VSE's strategic divestiture of its fleet segment and acquisition of Turbine Weld Industries, along with a new $700 million credit facility, positioned the company to focus on higher-margin aviation aftermarket opportunities. The firm reaffirmed its 2025 aviation segment revenue growth guidance of 35% to 40%, with organic growth expected in the high single to low double digits, while maintaining an adjusted EBITDA margin guidance range of 16% to 17%.VSE Corporate Events
Shareholder MeetingsDividendsBusiness Operations and Strategy
VSE Corporation Approves Key Proposals at Annual Meeting
Positive
May 9, 2025
On May 8, 2025, VSE Corporation held its Annual Meeting of Stockholders where five proposals were approved, including the election of eight directors, an amendment to increase authorized shares, and the ratification of Grant Thornton LLP as the independent accountant. Additionally, the Board declared a quarterly cash dividend of $0.10 per share, payable on July 30, 2025, to stockholders of record on July 16, 2025. These decisions reflect VSE’s strategic focus on expanding its capital structure and rewarding shareholders, potentially strengthening its market position and stakeholder confidence.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.