As of May 22, 2025, VSE Corp has a Discounted Cash Flow (DCF) derived fair value of $111.16 per share. With the current market price at $129.25, this represents a potential upside of -14.0%.
| Key Metrics | Value |
|---|---|
| DCF Fair Value (5-year) | $74.59 |
| DCF Fair Value (10-year) | $111.16 |
| Potential Upside (5-year) | -42.3% |
| Potential Upside (10-year) | -14.0% |
| Discount Rate (WACC) | 7.6% - 9.5% |
Revenue is projected to grow from $1080 million in 12-2024 to $2413 million by 12-2034, representing a compound annual growth rate of approximately 8.4%.
| Fiscal Year | Revenue (USD millions) | Growth |
|---|---|---|
| 12-2024 | 1080 | 26% |
| 12-2025 | 1108 | 3% |
| 12-2026 | 1229 | 11% |
| 12-2027 | 1377 | 12% |
| 12-2028 | 1530 | 11% |
| 12-2029 | 1647 | 8% |
| 12-2030 | 1807 | 10% |
| 12-2031 | 1898 | 5% |
| 12-2032 | 2075 | 9% |
| 12-2033 | 2276 | 10% |
| 12-2034 | 2413 | 6% |
Net profit margin is expected to improve from 3% in 12-2024 to 10% by 12-2034, driven by operational efficiency and economies of scale.
| Fiscal Year | Net Profit (USD millions) | Profit Margin |
|---|---|---|
| 12-2024 | 36 | 3% |
| 12-2025 | 51 | 5% |
| 12-2026 | 73 | 6% |
| 12-2027 | 99 | 7% |
| 12-2028 | 129 | 8% |
| 12-2029 | 160 | 10% |
| 12-2030 | 175 | 10% |
| 12-2031 | 184 | 10% |
| 12-2032 | 201 | 10% |
| 12-2033 | 221 | 10% |
| 12-2034 | 234 | 10% |
with a 5-year average of $13 million. Projected CapEx is expected to maintain at approximately 1% of revenue.
Depreciation is based on an average useful life of 5 years for capital assets.
| Fiscal Year | D&A (USD millions) |
|---|---|
| 12-2025 | 15 |
| 12-2026 | 17 |
| 12-2027 | 19 |
| 12-2028 | 20 |
| 12-2029 | 20 |
| 12-2030 | 22 |
Net working capital is expected to increase gradually, with projected changes affecting free cash flow.
| Components | Average Days |
|---|---|
| Days Receivables | 63 |
| Days Inventory | 208 |
| Days Payables | 74 |
| Fiscal Year | EBITDA | Tax | CapEx | Change in NWC | FCF |
|---|---|---|---|---|---|
| 9M/2025 | 88 | 12 | 12 | (55) | 120 |
| 2026 | 152 | 23 | 18 | 100 | 11 |
| 2027 | 193 | 32 | 20 | 65 | 76 |
| 2028 | 239 | 41 | 22 | 51 | 124 |
| 2029 | 283 | 51 | 24 | 61 | 147 |
| Valuation Method | Fair Price (USD) | Potential Upside |
|---|---|---|
| 5-Year DCF (Growth) | 74.59 | -42.3% |
| 10-Year DCF (Growth) | 111.16 | -14.0% |
| 5-Year DCF (EBITDA) | 66.13 | -48.8% |
| 10-Year DCF (EBITDA) | 97.01 | -24.9% |
Is VSE Corp (VSEC) a buy or a sell? VSE Corp is definitely a sell. Based on our DCF analysis, VSE Corp (VSEC) appears to be overvalued with upside potential of -14.0%. The company's strong projected growth in revenue and profitability, coupled with consistent capital expenditure, supports our positive outlook on its intrinsic value.
Key investment drivers include:
Investors should consider reducing exposure at the current market price of $129.25.