Aviation parts and services provider VSE is Monday's pick for IBD 50 Stocks To Watch. VSE stock jumped last week after the company's pivotal fourth-quarter earnings report and is nearing a buy point of a cup-without-handle base. The stock was down a fraction Monday morning.
When it reported fourth-quarter earnings late Wednesday, VSE said it topped profit and sales estimates. It added that profits grew after two declining quarters.
The IBD 50 name has shifted its focus to its aviation business after entering a definitive agreement to divest its vehicle fleet division. Its aviation unit offers maintenance, repair and parts distribution services to commercial, cargo and military customers.
"The sale of our fleet business is the final step in our strategic portfolio transformation, further simplifying and focusing our company, and strengthening our global leadership position as an aviation aftermarket parts and services provider," Chief Executive John Cuomo said in the company's Feb. 18 press release.
VSE announced it entered into the deal to sell its fleet business to One Equity Partners in a deal worth up to $230 million. The transaction is expected to close in the second quarter of 2025. VSE intends to use the net proceeds to reduce debt.
Further supporting its aviation focus, VSE acquired aerospace engine distributor and service provider Kellstrom Aerospace Group in December, according to its fourth-quarter earnings release.
VSE ranks No. 3 out of 31 stocks in the Commercial Services-Consulting industry group, which ranks 149th out of the 197 industry groups that Investor's Business Daily tracks.
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VSE Stock Back Near A High
VSE stock is in a bumpy cup base with a 123.92 buy point, according to MarketSurge pattern recognition. The entry point is also its record high, reached Nov. 13.
The aviation stock popped around 16.6% in heavy volume Thursday, and boldly passed its 50-day moving average following its earnings report late Wednesday.
Its relative strength line hit a 52-week high as shown by the blue dot on its weekly chart. Shares have climbed around 22% so far this year.
Aviation Services Provider Improves Bottom Line
VSE topped fourth-quarter earnings estimates, with its profit growing 6% after declining 22% and 23% in the prior two quarters.
Its revenue grew 27%, mainly from its aviation segment's sales increasing 48% to a record $227.4 million.
In the company's earnings release, Cuomo also said that "2024 was a transformative year for VSE, marked by record revenue and profitability in our aviation segment, the acquisition of two commercial aviation aftermarket businesses, and the divestiture of our federal and defense services segment."
VSE predicted full-year 2025 aviation segment revenue growth at 35% to 40%, in the fourth-quarter report.
First-quarter earnings forecasts show profit falling 13%, before jumping 37% then 55% and 36% over the following three quarters. Sales are projected to rise 17% then slip to 5% growth over the next four quarters.
Lastly, full-year 2025 profit projections call for a 26% increase and a 30% in 2026. Its IBD Earnings Per Share Rating is a mediocre 43 out of a best-possible 99.
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