While a number of people have identified that AMTM trades at a discount to peers, there seems to be a general misunderstanding about why this is. Much of AMTM's contract base is in low-value-add, low-growth, and low-margin contracts, such as base operations and training programs. Until AMTM figures out how to go upstream, it will continue to trade at a perpetual discount because, well, that's just how these things trade. Check out VVX, for example, which is a nearly identical setup. AMTM simple is not equivalent to Parsons or BAH (both best-in-breed operators).
Now, this doesn't mean Amentum is not too cheap (in fact, I think it's one of the best buys on the market right now), but it does mean the thesis is more nuanced than "low forward P/E and re-rate to market once everyone figures it out." This is just not how the situation will play out. AMTM will create value through deleveraging, transferring debt to equity, and accreting EPS.
AMTM may be able to go upstream on contract wins as a new CombineCo with greater scale and a stronger stack of services. This would be tremendous upside but is far from certain.
While a number of people have identified that AMTM trades at a discount to peers, there seems to be a general misunderstanding about why this is. Much of AMTM's contract base is in low-value-add, low-growth, and low-margin contracts, such as base operations and training programs. Until AMTM figures out how to go upstream, it will continue to trade at a perpetual discount because, well, that's just how these things trade. Check out VVX, for example, which is a nearly identical setup. AMTM simple is not equivalent to Parsons or BAH (both best-in-breed operators).
Now, this doesn't mean Amentum is not too cheap (in fact, I think it's one of the best buys on the market right now), but it does mean the thesis is more nuanced than "low forward P/E and re-rate to market once everyone figures it out." This is just not how the situation will play out. AMTM will create value through deleveraging, transferring debt to equity, and accreting EPS.
AMTM may be able to go upstream on contract wins as a new CombineCo with greater scale and a stronger stack of services. This would be tremendous upside but is far from certain.
any thoughts on PE overhang (e.g. amsec/lindsay goldberg still hold a ~37% stake). they initially invested in 2019 so this is already a 5-year hold
Really cool idea. Will have to dig through the subsidiary patent filings.
Thanks would be fascinated what you find
So UFOs
Terrific