Vse Corp (NASDAQ: VSEC)

Sector: Industrials Industry: Aerospace & Defense CIK: 0000102752
Market Cap 2.09 Bn
P/B 14.53
P/E 101.52
P/S 3.59
ROIC (Qtr) 3.93
Div Yield % 0.12
Rev 1y % (Qtr) 38.92
Total Debt (Qtr) 393.71 Mn
Debt/Equity (Qtr) 0.40

About

Price action

Investment thesis

Bull case

  • Robust free cash flow of 26.95M exceeds capital expenditure of 17.78M by 1.52x, indicating strong organic growth funding capability.
  • Strong operating cash flow of 44.72M provides 2.74x coverage of SG&A expenses 16.35M, showing efficient operational cost management.
  • Tangible assets of 929.89M provide robust 14.66x coverage of other current liabilities 63.43M, indicating strong asset backing.
  • Operating cash flow of 44.72M fully covers other non-current liabilities 7.55M by 5.92x, showing strong long-term stability.
  • Retained earnings of 384.42M provide strong 6.06x coverage of other current liabilities 63.43M, indicating earnings quality.

Bear case

  • Operating cash flow of 44.72M barely covers its investment activities of (99.58M), with a coverage ratio of -0.45, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 8.78M against inventory of 464.31M, the 0.02 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Operating cash flow of 44.72M provides thin coverage of dividend payments of (8.24M) with a -5.43 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 8.78M provide limited coverage of acquisition spending of (81.81M), which is -0.11x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • The company's operating cash flow of 44.72M shows concerning coverage of stock compensation expenses of 11.73M, with a 3.81 ratio indicating potential earnings quality issues.

Segments Breakdown of Revenue (2024)

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Aerospace & Defense
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 GE General Electric Co 340.73 Bn 39.15 7.43 20.49 Bn
2 RTX RTX Corp 266.41 Bn 39.57 3.01 39.51 Bn
3 BA Boeing Co 184.47 Bn 97.60 2.06 54.10 Bn
4 LMT Lockheed Martin Corp 145.11 Bn 28.92 1.93 21.70 Bn
5 HWM Howmet Aerospace Inc. 107.72 Bn 167.79 15.89 3.19 Bn
6 GD General Dynamics Corp 104.16 Bn 30.88 2.67 8.01 Bn
7 NOC Northrop Grumman Corp /De/ 101.77 Bn 24.33 2.43 17.02 Bn
8 TDG TransDigm Group INC 74.73 Bn 41.34 8.20 30.05 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.46 3.14
EV to Cash from Ops. EV/CFO 65.55 76.41
EV to Debt EV to Debt 5.78 80.89
EV to EBIT EV/EBIT 62.42 11.31
EV to EBITDA EV/EBITDA 44.44 30.07
EV to Free Cash Flow [EV/FCF] EV/FCF 81.05 86.36
EV to Market Cap EV to Market Cap 1.09 1.07
EV to Revenue EV/Rev 3.92 10.58
Price to Book Value [P/B] P/B 14.53 5.81
Price to Earnings [P/E] P/E 101.52 18.35
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.36 -3.22
Dividend Payout Ratio % Div Payout % (Qtr) 62.50 19.41
Dividend per Basic Share Div per Share (Qtr) 0.50 0.73
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 38.37 11.64
Interest Coverage Int. cover (Qtr) 1.91 -13.61
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 29.76 -65.17
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 11.09 1,593.29
Dividend Growth (1y) % Div 1y % (Qtr) 25.00 1.86
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -43.97 -43.11
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 36.22 19.42
EBIT Growth (1y) % EBIT 1y % (Qtr) -12.00 -34.51
EBT Growth (1y) % EBT 1y % (Qtr) 26.84 -35.59
EPS Growth (1y) % EPS 1y % (Qtr) -18.99 -112.67
FCF Growth (1y) % FCF 1y % (Qtr) 132.16 27.64
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 44.80 -0.19
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.71 0.51
Cash Payout Ratio Cash Payout (Qtr) 0.13 0.03
Cash Ratio Cash Ratio (Qtr) 0.05 1.78
Current Ratio Curr Ratio (Qtr) 3.94 3.63
Debt to Equity Ratio Debt/Equity (Qtr) 0.40 0.29
Interest Cover Ratio Int Coverage (Qtr) 1.91 -13.61
Times Interest Earned Times Interest Earned (Qtr) 1.91 -13.61
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 7.80 -345.58
EBIT Margin % EBIT Margin % (Qtr) 4.41 -382.34
EBT Margin % EBT Margin % (Qtr) 2.10 -387.64
Gross Margin % Gross Margin % (Qtr) 13.40 -33.21
Net Profit Margin % Net Margin % (Qtr) 1.00 -388.96