Although there are a couple of powerhouses in the defense market, notably, Lockheed Martin and Northrop Grumman, VSE Corporation (Nasdaq: VSEC) has managed to grow significantly in this space to the tune of 12% in total revenue year over year. They are a leading provider of aftermarket distribution and maintenance, repair and overhaul services for land, sea and air transportation assets. Currently, they are operating under 9 contracts with the U.S. government in addition to their commercial arm. Recently, they have seen tremendous growth and look to continue the momentum through 2023.
Comps: Tetra Tech, Inc. (Nasdaq: TTEK), Kratos Defense & Security Solutions, Inc. (Nasdaq: KTOS)
In terms of operations in the same sector, both Tetra Tech and Kratos also operate under defense contracts with the U.S. government. Moreover, both of these companies are valued over USD 1 billion, while VSE is sitting at USD 600 million. Despite this market capitalization difference, VSE provides a better price relative to earnings than both and beats Kratos in earnings per share, profit margin, and return on equity.