Buy or Sell VSE Stock?

VSE (VSEC) stock has fallen 13% during the past day, and is currently trading at $190.93. We believe there is a near-equal mix of good and bad in VSEC stock given its overall Moderate operating performance and financial condition. This is aligned with the stock’s Moderate valuation because of which we think it is Fairly Priced.

Below is our assessment:

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Let’s get into details of each of the assessed factors but before that, for quick background: With $3.9 Bil in market cap, VSE provides diversified aftermarket products and services across aviation, fleet, and federal sectors, including parts supply, inventory management, e-commerce fulfillment, and logistics for commercial and federal customers.

[1] Valuation Looks Moderate

This table highlights how VSEC is valued vs broader market. For more details see: VSEC Valuation Ratios

[2] Growth Is Very Strong

• VSE has seen its top line grow at an average rate of 41.3% over the last 3 years
• Its revenues have grown 68% from $794 Mil to $1.3 Bil in the last 12 months
• Also, its quarterly revenues grew 38.9% to $283 Mil in the most recent quarter from $204 Mil a year ago.

This table highlights how VSEC is growing vs broader market. For more details see: VSEC Revenue Comparison

[3] Profitability Appears Very Weak

• VSEC last 12 month operating income was $124 Mil representing operating margin of 9.3%
• With cash flow margin of 3.4%, it generated nearly $45 Mil in operating cash flow over this period
• For the same period, VSEC generated nearly $11 Mil in net income, suggesting net margin of about 0.8%

This table highlights how VSEC profitability vs broader market. For more details see: VSEC Operating Income Comparison

[4] Financial Stability Looks Moderate

• VSEC Debt was $394 Mil at the end of the most recent quarter, while its current Market Cap is $3.9 Bil. This implies Debt-to-Equity Ratio of 9.9%
• VSEC Cash (including cash equivalents) makes up $8.8 Mil of $1.6 Bil in total Assets. This yields a Cash-to-Assets Ratio of 0.6%

[5] Downturn Resilience Is Very Weak

VSEC has fared much worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• VSEC stock fell 47.9% from a high of $63.65 on 12 November 2021 to $33.13 on 13 July 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 21 December 2023
• Since then, the stock increased to a high of $218.57 on 1 February 2026 , and currently trades at $190.93

 
2020 Covid Pandemic

• VSEC stock fell 63.6% from a high of $38.04 on 1 January 2020 to $13.83 on 18 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 10 December 2020

 
2008 Global Financial Crisis

• VSEC stock fell 66.2% from a high of $30.84 on 15 October 2007 to $10.41 on 11 March 2009 vs. a peak-to-trough decline of 56.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 30 April 2014

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read VSEC Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.