Understanding how VSE Corporation (NASDAQ:VSEC) is performing as a company requires looking at more than just a years’ earnings. Today I will run you through a basic sense check to gain perspective on how VSE is doing by comparing its latest earnings with its long-term trend as well as the performance of its commercial services industry peers. View our latest analysis for VSE
Could VSEC beat the long-term trend and outperform its industry?
For the most up-to-date info, I use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This method allows me to analyze various companies on a more comparable basis, using the latest information. For VSE, its most recent earnings (trailing twelve month) is US$38.86M, which, relative to the prior year’s level, has increased by 41.12%. Since these values are somewhat short-term, I’ve computed an annualized five-year value for VSE’s net income, which stands at US$25.36M This shows that, generally, VSE has been able to increasingly grow its earnings over the last couple of years as well.
How has it been able to do this? Well, let’s take a look at if it is only attributable to an industry uplift, or if VSE has experienced some company-specific growth. Over the last few years, VSE expanded its bottom line faster than revenue by effectively controlling its costs. This has led to a margin expansion and profitability over time. Viewing growth from a sector-level, the US commercial services industry has been growing, albeit, at a unexciting single-digit rate of 6.32% over the past twelve months, and a substantial 11.14% over the last five years. This means any tailwind the industry is profiting from, VSE is able to leverage this to its advantage.
What does this mean?
VSE’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While VSE has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research VSE to get a more holistic view of the stock by looking at:
- Financial Health: Is VSEC’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Valuation: What is VSEC worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether VSEC is currently mispriced by the market.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2018. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.