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VSE (VSEC)
NASDAQ:VSEC
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VSE (VSEC) AI Stock Analysis

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VSEC

VSE

(NASDAQ:VSEC)

Rating:77Outperform
Price Target:
$166.00
▲(1.33% Upside)
VSE Corporation's overall stock score is driven by strong financial performance and positive earnings call sentiment, reflecting its strategic shift and operational improvements in the aviation segment. However, the high P/E ratio and potential overbought conditions suggest caution in valuation and technical analysis.
Positive Factors
Business Expansion
A new five-year deal with Eaton suggests VSE is entering a new vertical with promising potential.
Financial Performance
VSE reported strong second-quarter results above consensus, leading to a 4% increase in after-hours trading.
Strategic Partnerships
VSE has established deep distribution and MRO partnerships with several leading OEMs, including Pratt & Whitney Canada, Honeywell, and Triumph, driving growth in the aviation aftermarket services division.
Negative Factors
Acquisition Integration
VSE remains in consolidation mode of Turbine Weld Industries, TCI, and Kellstrom acquisitions before seeing larger contributions later in the year.
Market Competition
Despite strong earnings, the competitive landscape may challenge VSE's ability to consistently win new aerospace OEM deals and take market share from incumbents.

VSE (VSEC) vs. SPDR S&P 500 ETF (SPY)

VSE Business Overview & Revenue Model

Company DescriptionVSE Corporation operates as a diversified aftermarket products and services company in the United States. The company operates through three segments: Aviation, Fleet, and Federal and Defense. The Aviation segment provides international parts supply and distribution, supply chain solutions, and component and engine accessory maintenance, repair, and overhaul (MRO) services. 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, and other services to assist aftermarket commercial and federal customers with their supply chain management. 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. The Federal and Defense segment offers aftermarket refurbishment and sustainment services to extend and maintain the life cycle of military vehicles, ships, and aircraft for the United States Department of Defense (DoD). This segment also provides foreign military sales services, engineering, logistics, maintenance, configuration management, prototyping, technology, and field support services to the DoD and other customers. In addition, this segment offers energy consulting services and IT solutions to various DoD, federal civilian agencies, and commercial clients. The company also provides vehicle and equipment maintenance and refurbishment, logistics, engineering support, energy services, and IT and health care IT solutions, as well as consulting services. VSE Corporation was incorporated in 1959 and is headquartered in Alexandria, Virginia.
How the Company Makes MoneyVSE generates revenue through multiple key streams, primarily by providing MRO services and logistics support to government and commercial customers. The company earns money from contracts with the U.S. Department of Defense and other governmental agencies, which typically involve long-term agreements for maintenance and support services. Additionally, VSE has partnerships with various original equipment manufacturers (OEMs) that enable it to supply parts and services, further contributing to its revenue. The company also benefits from its strategic acquisitions that expand its service offerings and customer base, enhancing its market position and driving growth.

VSE Earnings Call Summary

Earnings Call Date:Jul 30, 2025
(Q2-2025)
|
% Change Since: 15.79%|
Next Earnings Date:Oct 29, 2025
Earnings Call Sentiment Positive
VSE Corporation's earnings call reflects a strong positive sentiment, driven by record financial performance, strategic focus on the aviation aftermarket, successful acquisitions, and enhanced financial flexibility. While there were some challenges such as a strategic decline in USM revenue and initial tariff-related softness, the company's positive achievements significantly outweigh these issues.
Q2-2025 Updates
Positive Updates
Record Financial Performance
VSE Corporation reported record revenue, profitability, and margins in Q2 2025. Consolidated revenues increased 41% to $272 million, with adjusted EBITDA increasing 52% to $43 million. Adjusted net income increased by 149% to $20 million, and adjusted net income per diluted share increased by 106%.
Strategic Divestiture and Focus
The company completed the sale of its Fleet segment, marking its transformation into a pure-play aviation aftermarket company, focusing on higher growth and higher-margin distribution and MRO services.
Acquisitions and Partnerships
VSE acquired Turbine Weld Industries, expanding its engine service capabilities. It also signed a new 5-year authorized service center agreement with Eaton for hydraulic pump MRO support, marking Eaton's first authorized aftermarket repair partnership.
Strong Aviation Segment Growth
Aviation segment revenue increased by 41%, with distribution revenue up 50% and MRO revenue up 27%. Adjusted EBITDA margin improved by 80 basis points year-over-year, driven by favorable pricing and product mix.
Financial Flexibility
VSE secured a new $700 million credit facility, providing more flexibility and a lower total cost of capital to support growth. The company achieved an adjusted net leverage ratio of 2.2x.
Negative Updates
USM Revenue Decline
The company strategically reduced Kellstrom's USM revenue by approximately 20% on a run rate basis to focus on higher-margin product lines, resulting in reduced top-line USM revenue.
Tariff Uncertainty
The second quarter began with some softness in the aftermarket, driven by uncertainty around tariffs, although activity rebounded in May and June.
Company Guidance
During the VSE Corporation's Second Quarter 2025 Earnings Conference Call, the company provided a positive outlook with multiple record achievements. They reported a 41% increase in consolidated revenues, reaching $272 million, and a 52% rise in adjusted EBITDA to $43 million, representing 16% of revenue. The aviation segment showed notable growth, with a 50% increase in distribution revenue and a 27% rise in MRO revenue, leading to a 48% increase in aviation adjusted EBITDA to a record $47 million or 17.1% of revenue. The company completed the sale of its Fleet segment and focused on expanding its aviation aftermarket presence, including acquiring Turbine Weld Industries. They also secured a $700 million credit facility, enhancing financial flexibility. The guidance for 2025 included maintaining aviation segment revenue growth between 35% and 40%, with an increased adjusted EBITDA margin target of 16.5% to 17%. VSE anticipates continued strength in the aviation aftermarket, with engine-related MRO and distribution revenue now constituting over 50% of total aviation revenue.

VSE Financial Statement Overview

Summary
VSE demonstrates robust revenue growth and low leverage, indicating financial stability and effective revenue generation. However, challenges exist with net profitability and cash flow generation, pointing to potential inefficiencies in cost management and operational cash conversion. While the company is well-positioned in terms of equity, enhancing profitability and cash flow efficiency will be crucial for sustaining growth and delivering shareholder value.
Income Statement
78
Positive
VSE has demonstrated solid revenue growth with an increase from $860.49M in 2023 to $1.09B TTM, alongside a healthy EBIT margin of 8.69% and EBITDA margin of 10.98% TTM. The gross profit margin is 9.85% TTM, indicating effective control over production costs. The net profit margin, although positive at 1.42% TTM, reflects a small portion of revenue being converted into net income, pointing to potential cost inefficiencies or high-interest expenses. Overall, VSE shows strength in revenue growth and operating efficiency, with room for improvement in cost management and net profitability.
Balance Sheet
72
Positive
VSE's balance sheet shows strong equity with a significant equity ratio of 56.28% TTM, indicating a well-capitalized company. The debt-to-equity ratio is 0.05 TTM, suggesting low leverage and reduced financial risk. However, the return on equity is relatively low at 1.59% TTM, demonstrating limited effectiveness in generating profits from shareholders' equity. While the company maintains financial stability with low leverage, there is a need to enhance profitability to maximize shareholder value.
Cash Flow
65
Positive
VSE's cash flow statement highlights challenges in free cash flow generation, with negative free cash flow at -$14.46M TTM, though an improvement from -$51.74M in the prior year. The operating cash flow to net income ratio is 0.09 TTM, reflecting limited cash generation relative to net income, suggesting potential issues in converting earnings into cash flow. Despite improvements in free cash flow, the company needs to focus on enhancing operational efficiency to improve cash conversion.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue1.10B1.08B860.49M949.76M750.85M661.66M
Gross Profit57.92M108.20M95.61M77.93M43.63M75.39M
EBITDA129.42M110.18M111.41M78.21M21.52M78.90M
Net Income52.32M15.32M39.13M28.06M7.97M-5.17M
Balance Sheet
Total Assets1.60B1.73B1.35B999.79M918.56M780.08M
Cash, Cash Equivalents and Short-Term Investments16.91M29.03M7.77M478.00K518.00K378.00K
Total Debt45.76M485.21M459.26M325.89M317.73M277.92M
Total Liabilities622.50M746.43M733.61M550.26M501.23M423.76M
Stockholders Equity979.53M988.19M616.73M449.53M417.33M356.32M
Cash Flow
Free Cash Flow13.32M-51.74M-40.49M-3.16M-28.12M31.33M
Operating Cash Flow30.81M-31.04M-21.83M8.05M-17.60M35.76M
Investing Cash Flow-99.24M-263.67M-235.69M-2.38M-61.63M20.22M
Financing Cash Flow66.34M315.81M264.97M-5.71M79.37M-56.34M

VSE Technical Analysis

Technical Analysis Sentiment
Positive
Last Price163.82
Price Trends
50DMA
137.42
Positive
100DMA
128.90
Positive
200DMA
118.09
Positive
Market Momentum
MACD
7.83
Negative
RSI
71.06
Negative
STOCH
84.32
Negative
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 163.82 is above the 20-day moving average (MA) of 145.83, above the 50-day MA of 137.42, and above the 200-day MA of 118.09, indicating a bullish trend. The MACD of 7.83 indicates Negative momentum. The RSI at 71.06 is Negative, neither overbought nor oversold. The STOCH value of 84.32 is Negative, 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 (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
77
Outperform
$3.41B94.396.22%0.24%13.00%120.90%
76
Outperform
$2.80B235.361.02%19.91%-73.61%
69
Neutral
$1.73B27.116.86%5.07%
63
Neutral
$10.80B16.556.58%2.06%2.37%-15.86%
62
Neutral
$1.38B34.975.86%2.42%72.72%
59
Neutral
$4.08B-2.57%9.19%72.88%
58
Neutral
$2.02B56.8946.74%-4.74%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
VSEC
VSE
163.82
74.60
83.61%
AIR
AAR
77.15
14.02
22.21%
DCO
Ducommun
91.46
27.22
42.37%
MRCY
Mercury Systems
66.83
26.73
66.66%
TGI
Triumph Group
26.01
12.53
92.95%
VVX
V2X
60.09
12.19
25.45%

VSE Corporate Events

Dividends
VSE Declares Quarterly Cash Dividend Announcement
Positive
Jul 31, 2025

On July 31, 2025, VSE Corporation announced that its Board of Directors declared a quarterly cash dividend of $0.10 per share, payable on October 29, 2025, to stockholders of record as of October 15, 2025. This decision reflects VSE’s commitment to returning value to its shareholders, potentially enhancing its attractiveness to investors and solidifying its position in the aviation aftermarket industry.

The most recent analyst rating on (VSEC) stock is a Buy with a $100.00 price target. To see the full list of analyst forecasts on VSE stock, see the VSEC Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Aug 02, 2025