VSE (VSEC) AI Stock Analysis

Compare

242 Followers

VSEC Dividends

Top Page

VSE

(NASDAQ:VSEC)

58Neutral

VSE's overall stock score is influenced by strong revenue growth and strategic positioning in the Aviation sector, but is tempered by profitability and cash flow challenges. The technical analysis indicates a mixed outlook with no strong momentum, and the high P/E ratio suggests overvaluation. While the earnings call highlighted positive future growth prospects, integration challenges and segment-specific issues present risks.

Positive Factors

Acquisitions

VSEC beat expectations for the first quarter, deepened exposure to the jet engine market with a $50M acquisition, and is ahead of schedule with recent acquisitions.

Business Transformation

VSEC has finalized the sale of the Fleet segment making the company a pure play aerospace aftermarket provider, thereby, completing the transformation mission CEO Cuomo set out to do ~4 years ago.

Financial Performance

VSEC's aviation segment achieved record revenues and profitability, with sales increasing by 58% driven by balanced contributions across distribution and maintenance, repair and overhaul.

Negative Factors

Integration Challenges

The ongoing integration of TCI and Kellstrom engine aftermarket focused acquisitions dilutes margins in 1H25.

Margin Pressure

The ongoing integration of TCI and Kellstrom engine aftermarket focused acquisitions dilutes margins in 1H25.

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

Market Cap

$2.44B

Dividend Yield0.34%

Average Volume (3M)265.06K

Price to Earnings (P/E)69.0

Beta (1Y)1.38

Revenue Growth19.84%

EPS Growth-51.67%

CountryUS

Employees1,400

SectorIndustrials

Sector Strength80

IndustryAerospace & Defense

Share Statistics

EPS (TTM)0.78

Shares Outstanding20,669,280

10 Day Avg. Volume217,325

30 Day Avg. Volume265,064

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap0.98

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit22.01

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$138.33

Price Target Upside8.68% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering5

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

Positive

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.

Balance Sheet

Positive

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.

Cash Flow

Neutral

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.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
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

Technical Analysis Sentiment

Positive

Last Price127.28

Price Trends

50DMA

116.13

Positive

100DMA

108.42

Positive

200DMA

102.45

Positive

Market Momentum

MACD

2.99

Negative

RSI

66.81

Neutral

STOCH

78.10

Neutral

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 127.28 is above the 20-day moving average (MA) of 114.38, above the 50-day MA of 116.13, and above the 200-day MA of 102.45, indicating a bullish trend. The MACD of 2.99 indicates Negative momentum. The RSI at 66.81 is Neutral, neither overbought nor oversold. The STOCH value of 78.10 is Neutral, 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
VVX	75 Outperform	$1.52B	36.59	4.10%	―	7.38%	―
DCO	72 Outperform	$904.58M	26.09	5.25%	―	3.02%	95.76%
Sector *	64 Neutral	$4.24B	11.64	5.23%	249.83%	4.07%	-10.54%
MRCY	59 Neutral	$3.01B	―	-4.45%	―	5.66%	52.71%
VSEC	58 Neutral	$2.44B	68.96	4.83%	0.34%	19.84%	-51.67%
AIR	58 Neutral	$2.12B	246.75	-1.08%	―	21.07%	-120.95%
TGI	54 Neutral	$1.97B	282.19	46.74%	―	-8.59%	―

* Industrials Sector Average

Performance Comparison

VSEC

VSE

131.42

50.98

63.38%

AIR

AAR

59.57

-12.52

-17.37%

DCO

Ducommun

66.72

9.53

16.66%

MRCY

Mercury Systems

46.03

17.20

59.66%

TGI

Triumph Group

25.61

11.32

79.22%

VVX

V2X

50.70

1.47

2.99%

VSE Earnings Call Summary

Earnings Call Date:May 06, 2025

(Q4-2024)

% Change Since: 7.81%|

Next Earnings Date:Jul 30, 2025

Earnings Call Sentiment Positive

The earnings call reflects a positive sentiment with significant achievements in the Aviation segment, strategic acquisitions, divestitures, and strong revenue growth projections. However, there are challenges noted in the Fleet segment's performance due to USPS transitions and integration-related margin dilution for recent acquisitions.

Q4-2024 Updates

Positive Updates

Record Revenue and Profitability in Aviation Segment

VSE delivered record revenue and profitability for the Aviation segment in 2024. Revenue growth was driven by strong execution on new and existing distribution programs, expanded MRO capabilities, and contributions from recent acquisitions, leading to a 45% year-over-year increase to $786 million.

Strategic Acquisitions and Divestitures

VSE acquired Kellstrom Aerospace and Turbine Controls to expand its presence in the aviation aftermarket. It also divested its Federal & Defense Services segment and announced the sale of its Fleet segment, Wheeler Fleet Solutions, marking the final step in its transformation into a pure-play aviation aftermarket company.

Aviation Segment Growth Projections

The Aviation segment is expected to grow between 35% to 40% in 2025, with organic growth projected at high single-digit to low double-digit percentages, supported by market share gains, distribution program growth, and repair capability expansion.

Positive Cash Flow and Leverage Management

VSE generated $55 million of operating cash flow and $52 million of free cash flow in Q4 2024, driven by disciplined working capital management and strong operating results. The company maintained a net leverage of 2.5 times.

Negative Updates

Decline in Fleet Segment Revenue

Fleet segment revenue declined 12% in Q4 2024 and 30% in revenue from the USPS program for the full year, driven by the USPS transition to a new fleet management information system, leading to reduced maintenance-related activities.

Challenges with USPS Transition

The USPS transition to a new fleet management information system resulted in a decline in maintenance-related activities and reduced part requirements, negatively impacting Fleet segment revenue and adjusted EBITDA.

Integration Challenges and Margin Dilution

The integration of recent acquisitions TCI and Kellstrom is expected to have a near-term margin dilution on the Aviation segment, with a projected 90 basis point impact on adjusted EBITDA margins for 2025.

Company Guidance

During the VSE Corporation Fourth Quarter and Full Year 2024 Results Conference Call on February 28, 2025, the company provided guidance for 2025, highlighting expected revenue growth in its Aviation segment between 35% to 40%. This growth is supported by acquisitions, with TCI and Kellstrom contributing approximately 26% to 28% to the overall increase. VSE anticipates outperforming market growth organically, aiming for high single-digit to low double-digit growth driven by market share gains and program expansion. The consolidated adjusted EBITDA margins are projected to range between 15.5% and 16.5%, with an anticipated offset of margin dilution from acquisitions by improvements in core aviation operations. The company expects interest expenses of $31 million to $33 million, an effective tax rate of 25%, and depreciation and amortization between $36 million to $38 million for 2025, all figures pre-fleet divestiture.

VSE Corporate Events

Executive/Board ChangesDividends

VSE Corporation Extends CEO Contract and Declares Dividend

Positive

Dec 18, 2024

VSE Corporation has amended and restated the employment agreement with its CEO, John A. Cuomo, securing his position until 2028 with a lucrative compensation package including salary, bonuses, and stock options. Additionally, VSE announced a quarterly cash dividend of $0.10 per share, highlighting its continued commitment to shareholder returns.

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.