On April 3, shares of
) achieved a new 52-week high of $57.56 per share. The company's
strong fundamentals and increased government spending drove the
momentum. The stock returned over 130% in the 1-year period
compared with the NASDAQ's return of about 30%.
The company's business had been sluggish since 2012 owing to
the weak conomic conditions. Also, the decline in demand from the
U.S. government in 2013 also impacted the company's business
negatively. However, investors' sentiments improved as the
budgetary woes finally ebbed and Obama's $1.1 trillion Omnibus
spending measure bill was passed in Jan 2014.
In last month, the company had also received contracts worth
$13.4 million from the Foreign Military Sales (FMS) Naval Ship
Transfer and Repair (N*STAR). The contract was part the Naval Sea
Systems Command (NAVSEA) International Fleet Support Program.
Moreover, the company's persistent efforts to diversify and
expand its business while simultaneously reducing costs were some
of the key drivers behind the company's growth in the last year.
Moreover, VSE's robust cash flow position allowed it to reduce
its debts significantly in 2013.
The company is now expanding its products and services for the
markets other than U.S. Department of Defense. These high margin
businesses comprised more than 50% of the company's total sales
VSE has seen positive earnings estimate revision, which
reflected analysts' bullish stance on the company. There has been
once upward revision and no downward revision over the past 30
days. The Zacks Consensus Estimate has also risen over the same
Notably, the Zacks Consensus Estimate for 2014 has increased
to $4.59 per share from $4.49 per share over the past 30 days,
which reflects an increase of 2.22%. For first-quarter 2014, the
Estimate rose a significant 4.42% to $1.18 per share.
Another stock in the same industry that was recently in news
Foster Wheeler AG
), which scaled a new 52-week high of $33.46 per share April 2,
We assign VSE a Zacks Rank #2 (Buy) based on the rise in its
share price and believe that the company has more upside
potential left. Some other stocks worth consideration in the
engineering and heavy industry include
AECOM Technology Corp.
Quanta Services, Inc.
). Both of these have the same Zacks Rank as VSE.
AECOM TECH CORP (ACM): Free Stock Analysis
FOSTER WHELR AG (FWLT): Free Stock Analysis
QUANTA SERVICES (PWR): Free Stock Analysis
VSE CORP (VSEC): Free Stock Analysis Report
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