Amentum Holdings, Inc. is a leading provider of specialized technical and operational services, serving defense, intelligence, and commercial markets at scale. The company leverages advanced technology and domain expertise to deliver solutions in critical infrastructure, cyber intelligence, and mission support. Its diversified contract base and focus on high-value, complex projects underpin its competitive position in the government services sector.As of Wednesday, AMTM shares were priced at $29.86, up a st ...

Core Insights - Amentum has been awarded a $3.5 billion contract by the Defense Threat Reduction Agency (DTRA) for the Cooperative Threat Reduction Integrating Contract (CTRIC) IV, focusing on chemical, biological, radiological, and nuclear threat reduction capabilities [1][2] - The contract spans 10 years, allowing Amentum to compete for various task orders to provide a wide range of services and products to DTRA [2] Company Overview - Amentum is recognized as a global leader in advanced engineering and technology solutions, with a workforce of approximately 50,000 employees operating in over 70 countries [4] - The company emphasizes its commitment to safety, collaboration, and well-being as integral to its success in addressing complex challenges in science, security, and sustainability [4] Industry Context - The DTRA's mission includes deterring strategic attacks, preventing and countering weapons of mass destruction, and supporting national security for the U.S. and its allies [3]

Core Insights - Engine Capital Management has completely divested its position in Amentum Holdings, selling 635,255 shares for an estimated $15 million, marking a strategic exit from the investment [2][3][7] Company Overview - Amentum Holdings is currently priced at $28.88, with a market capitalization of $7 billion, trailing a revenue of $14.4 billion and a net income of $66 million over the trailing twelve months [5] - The company specializes in mission-critical services, including missile defense, IT and engineering for defense and space, environmental remediation, and advanced cyber and intelligence solutions [9][10] Financial Performance - Amentum reported a strong fourth quarter with $3.9 billion in revenue, $300 million in adjusted EBITDA, and $261 million in free cash flow, while expanding its backlog to $47.1 billion and reducing net leverage [11] - The company has multi-year contract visibility and fiscal year 2026 guidance suggests potential revenue of up to $14.3 billion and free cash flow of as much as $575 million, indicating long-term appeal [12] Market Position - Amentum serves U.S. government agencies, defense and intelligence clients, and energy sector organizations, positioning itself as a key partner in critical mission solutions and advanced cyber capabilities [10] - The stock has shown volatility since its public-market debut last September, but the underlying growth trajectory remains intact, driven by mission-critical spending across defense, space, nuclear, and digital infrastructure [12]

Core Thesis - Amentum Holdings, Inc. is positioned as a leading government technology contractor following its merger with Jacobs Solutions, creating a scaled entity with significant revenue and backlog [2][3] Company Overview - Amentum provides engineering and technology solutions to U.S. and allied government agencies, with a pro forma revenue near $14 billion and a backlog exceeding $44.6 billion [2][3] - The company has over 53,000 employees across 80 countries, enhancing its competitive positioning against Tier 1 incumbents like Leidos and Booz Allen Hamilton [3] Financial Metrics - As of November 28th, Amentum's share price was $28.63, with trailing and forward P/E ratios of 106.04 and 12.03 respectively [1] - The market currently undervalues Amentum, pricing it at a forward P/E of 10.4x, reflecting a typical "conglomerate discount" [5] - The company has an Owner Earnings yield of 10.8%, indicating strong free cash flow generation and deleveraging potential [6] Strategic Initiatives - Key value drivers include anticipated cost synergies of $50–70 million, aggressive debt paydown, and expansion of the Digital Solutions segment, which has shown 8% EBITDA margins [5] - Recent contract wins, including a $946 million U.S. Army contract and $350 million in digital task orders, validate the strategic rationale behind the merger [6] Growth Potential - With net leverage improving to 3.5x and a strong pipeline, Amentum presents a compelling risk/reward profile, with potential stock valuation reaching mid-$30s or even $42 with successful growth [7] - The combination of stable revenue, high free cash flow, and operational scale makes Amentum an attractive investment opportunity in the government technology sector [7] Historical Performance - Amentum's stock price has appreciated approximately 53.34% since March 2025, reflecting the successful execution of the bullish thesis on the company [8]

Group 1: Company Performance - Argan (AGX) has returned approximately 156.2% since the beginning of the calendar year, significantly outperforming the average gain of 5.5% in the Construction group [4] - The Zacks Consensus Estimate for AGX's full-year earnings has increased by 14% over the past three months, indicating improving analyst sentiment and a positive earnings outlook [3] - Argan is currently ranked 1 (Strong Buy) in the Zacks Rank system, suggesting strong potential for future performance [3] Group 2: Industry Context - Argan belongs to the Building Products - Miscellaneous industry, which includes 33 individual stocks and currently holds a Zacks Industry Rank of 89, with an average loss of 2.9% this year [5] - Another stock in the Construction sector, Amentum Holdings (AMTM), has a year-to-date return of 35.8% and is ranked 2 (Buy) in the Zacks Rank system [4][5] - The Engineering - R and D Services industry, to which Amentum Holdings belongs, has gained 13% year to date, indicating a relatively stronger performance compared to the Building Products - Miscellaneous industry [6]

Core Insights - Amentum Holdings, Inc. reported better-than-expected fourth-quarter results, with adjusted earnings per share of 63 cents, surpassing the analyst consensus estimate of 59 cents [1] - Quarterly sales reached $3.925 billion, reflecting a 77% year-over-year increase, exceeding the expected $3.613 billion [1] - The company provided guidance for 2026 revenue between $13.95 billion and $14.30 billion, compared to the analysts' consensus estimate of $14.08 billion [1] Company Performance - Amentum's strong fourth-quarter results mark a successful first year as a public company, showcasing financial performance that exceeded expectations [2] - CEO John Heller highlighted the company's resilience and alignment with global trends, emphasizing growth areas such as global nuclear energy, critical digital infrastructure, and space systems [2] - Despite the positive results, Amentum shares fell 0.6% to $29.82 following the announcement [2] Analyst Reactions - Following the earnings announcement, several analysts adjusted their price targets for Amentum [3] - Citizens analyst Trevor Walsh maintained a Market Outperform rating and raised the price target from $30 to $35 [5] - Morgan Stanley analyst Kristine Liwag upgraded the stock from Underweight to Equal-Weight and increased the price target from $20 to $35 [5] - RBC Capital analyst Ken Herbert maintained a Sector Perform rating and raised the price target from $26 to $30 [5] - JP Morgan analyst Seth Seifman maintained a Neutral rating and increased the price target from $30 to $34 [5]

Upgrades - Argus upgraded Herbalife (HLF) to Buy from Hold, citing a Q3 earnings beat and raising FY25 EPS view by $0.03 to $2.15 and FY26 view by $0.04 to $2.64 [2] - JPMorgan upgraded Atmus Filtration (ATMU) to Overweight from Neutral with a price target increase to $60 from $53, following the proposed acquisition of Koch Filter [2] - Morgan Stanley upgraded Amentum (AMTM) to Equal Weight from Underweight, raising the price target to $35 from $20, indicating a more balanced risk/reward at current share levels [3] - Northland upgraded NetApp (NTAP) to Outperform from Market Perform, increasing the price target to $137 from $120, after reporting revenue growth of 4% year-over-year in fiscal Q2 and guidance for 5% growth in the second half of FY26 [3] - Deutsche Bank upgraded Autodesk (ADSK) to Buy from Hold, raising the price target to $375 from $345, following "very healthy" Q3 results described as one of the "cleanest" quarterly prints in recent years [4] Downgrades - Macquarie downgraded Nio (NIO) to Neutral from Outperform, lowering the price target to $5.30 from $6.70, after issuing "weak" Q4 volume guidance of 122,500 units at the midpoint [5] - Craig-Hallum downgraded PagerDuty (PD) to Hold from Buy, reducing the price target to $15 from $20, noting a fundamental change in end markets negatively affecting PagerDuty [5] - UBS downgraded Biohaven (BHVN) to Neutral from Buy, with a price target decrease to $11 from $26, citing multiple R&D and regulatory setbacks impacting confidence in its pipeline [5] - Bernstein downgraded Ambev (ABEV) to Market Perform from Outperform, setting a price target of $2.88, attributing the downgrade to valuation concerns as shares rose 16% year-to-date [5] - RBC Capital downgraded Morgan Stanley Direct Lending (MSDL) to Sector Perform from Outperform, lowering the price target to $18 from $19, suggesting lower net interest income return on equity expectations for 2026 [5]

Core Insights - Amentum Holdings, Inc. (NYSE:AMTM) achieved a new all-time high stock price of $31.87, closing up 18.25% at $30 following strong earnings results for Q4 FY2025 [1][2] - The company reported a net income of $66 million for the full fiscal year 2025, a significant turnaround from an $82 million net loss in the previous year [1] - Revenues for FY2025 increased by 72% to $14.39 billion, driven by the integration of Jacobs' Critical Mission Solutions and Cyber & Intelligence businesses [2] - In Q4 alone, net income rose by 54% to $40 million, with revenues surging 77% to $3.9 billion [3] Financial Performance - Amentum's Q4 results reflect a strong financial performance, with revenues and net income showing substantial year-on-year growth [3] - For FY2026, the company projects revenues between $13.95 billion and $14.3 billion, indicating an implied growth of 3% year-on-year [3] - Adjusted EBITDA is expected to grow by 5% to a range of $1.1 billion to $1.14 billion, while adjusted EPS is projected at $2.25 to $2.45, reflecting an implied growth of 12% [3] Management Commentary - CEO John Heller highlighted the strong Q4 results as a capstone to a remarkable first year as a public company, emphasizing the resilience of the business and alignment with global trends [3]

Core Insights - Amentum Holdings reported strong quarterly results, leading to an 18% increase in share price following the announcement [1] Financial Performance - In the final quarter of fiscal 2025, Amentum generated nearly $3.93 billion in revenue, a 10% year-over-year increase, driven by the critical mission solutions and cyber and intelligence business acquired from Jacobs [2] - Non-GAAP net income rose by 34% to $154 million, or $0.63 per share, surpassing analyst expectations of $3.61 billion in revenue and $0.59 per share in adjusted net income [3] - Revenue from digital solutions increased by 11% to almost $1.5 billion, while global engineering revenue rose by 9% to $2.43 billion [4] Future Outlook - Amentum anticipates continued growth in fiscal year 2026, projecting revenue between $14 billion and $14.3 billion, with adjusted net profit expected to range from $2.25 to $2.45 per share [5] - Although the revenue forecast is slightly below the previous year's total, the profitability outlook is significantly higher than the prior year's $2 per share [5] Industry Context - The defense industry is experiencing a prosperous period due to increased global tensions and cybersecurity threats, positioning Amentum to capitalize on these opportunities [6]

Government Contracts and Regulations - The U.S. federal government accounted for 81% of the company's revenues for the fiscal year 2025[100] - The company faces risks from potential decreases in U.S. federal government contracts, which could materially affect its financial condition and results[100] - The company is subject to regular audits by U.S. federal government agencies, which can lead to payment delays and financial penalties[107] - A delay in the federal government's budget process could adversely impact the company's revenue and operating results[109] - The company’s contracts are subject to specific procurement regulations, which may impose additional costs and risks compared to private sector contracts[103] - The uncertainty surrounding U.S. federal government spending levels could adversely affect funding for individual programs and delay purchasing decisions by customers[111] - The procurement process for U.S. federal government contracts may change, leading to potential delays and increased costs[114] - Changes in U.S. federal government contracting rules could impair the company's ability to obtain new contracts or renew existing ones[177] - Compliance with U.S. federal government procurement regulations increases performance and compliance costs, which are regularly evolving[166] Financial Risks and Indebtedness - The company has significant indebtedness, which could limit its operational flexibility and increase financial risk[98] - The company is required to test goodwill for possible impairment annually, which could significantly impact financial results if impairment is recorded[161] - The company may incur significant costs for engineering and materials before receiving payment, impacting liquidity and potentially leading to penalties for missed deadlines[126] - The company has a significant amount of indebtedness, including a $1,000 million offering of 7.250% senior notes due August 1, 2032[183] - The credit facility consists of a term facility maturing on September 27, 2031, and a revolving facility maturing on September 27, 2029[183] - A breach of covenants in the credit facility could result in an event of default, adversely affecting the company's financial condition[188] - The company may face substantial indemnification obligations under tax matters agreements, which could adversely affect its financial condition[203] Competition and Market Environment - The company operates in a highly competitive environment, which may lead to loss of market share if it cannot compete effectively[94] - The company faces intense competition in providing engineering and technology solutions, which may pressure contract prices and profit margins[113] - Revenues derived from fixed-price contracts represented 24% of total revenues for fiscal year 2025, exposing the company to risks of cost overruns[123] - 63% of the company's revenues for fiscal year 2025 were generated from cost-plus-fee type contracts, which generally have lower profitability than fixed-price contracts[119] Cybersecurity and Data Privacy - The company is exposed to cybersecurity risks that could result in financial losses and reputational harm[98] - Cybersecurity risks are heightened due to remote work arrangements, which could lead to significant financial losses and reputational harm[138] - The company faces risks related to data privacy and security compliance, which could lead to investigations or penalties[178] - The company must comply with specific cybersecurity requirements under the CMMC program, which could impact its ability to bid on government contracts[179] - The company faces risks related to compliance with data privacy and security laws, which could result in regulatory actions and financial penalties[180] Operational and Environmental Risks - Climate change-related issues could adversely affect the company's equipment and infrastructure, impacting financial performance[102] - Climate change-related events could adversely affect the company's operations, leading to financial losses and increased costs due to natural disasters[230][231] - Regulatory responses to climate change may increase operational costs or potentially reduce demand for the company's services, impacting financial performance[232][233] - The company operates in high-risk locations, which may result in significant security costs and potential harm to employees[153] - The company faces potential adverse impacts from extraordinary events, such as natural disasters or pandemics, which could disrupt operations and increase costs[249] Employee and Labor Relations - The company has approximately 50,000 employees globally, which exposes it to various labor and employment claims, including harassment and discrimination allegations[133] - The expiration of collective bargaining agreements may lead to increased operating costs or labor disruptions, impacting financial results[251] - Employee benefit plan expenses may fluctuate due to inflation and interest rate changes, potentially affecting cash flows[252] - Rising healthcare costs could materially impact the company's financial condition if trends continue[253] - The company participates in Multi-Employer Pension Plans, which could impose liabilities if underfunded[254] Strategic Growth and Acquisitions - The company’s growth strategy includes acquisitions and strategic investments, which carry risks such as assumption of unknown liabilities and difficulties in integration[162] - Significant transaction costs are associated with business combinations and strategic investments, which could affect financial performance[167] - The realization of anticipated benefits from recent transactions depends on successful integration and may be offset by integration costs[192] Governance and Shareholder Matters - Amentum Equityholder holds a significant percentage of Amentum's common stock, influencing shareholder decisions and potentially limiting other shareholders' influence[214] - Amentum's governance documents include anti-takeover provisions that may impede or discourage a change of control[211] - Amentum Equityholder has the right to nominate directors based on its ownership percentage, which could lead to conflicts of interest[216] - Amentum's financial reporting systems may not meet public company requirements, posing risks to future operations and stock price[204] - Amentum's internal control deficiencies could result in restatements of financial statements, impacting investor confidence[206] Intellectual Property and Compliance - The company faces risks related to the protection of its intellectual property, which could impact its competitive advantage if not adequately safeguarded[237][240] - Indemnity provisions in agreements may expose the company to substantial liability for intellectual property infringement or other violations, affecting business relationships and financial conditions[244] - The company is subject to impairment testing for long-lived assets, which could lead to significant charges if cash flow levels are insufficient[245] Economic and Market Conditions - Continuing elevated inflation and rising interest rates could reduce demand for services and decrease profits on existing fixed-price contracts[119] - Economic downturns and political uncertainties may negatively affect customer spending and project funding, leading to reduced demand for the company's services[234][235] - The company's stock price may experience volatility influenced by various factors, including government spending patterns and economic conditions[223][224] - The company anticipates potential dilution of ownership due to equity awards granted to directors, officers, and employees, as well as possible equity issuance for acquisitions[220]