VSE Corporation (NASDAQ:VSEC) Analysts Just Slashed This Year's Estimates

The analysts covering VSE Corporation (NASDAQ:VSEC) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the downgrade, the latest consensus from VSE's six analysts is for revenues of US$1.2b in 2025, which would reflect a meaningful 11% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to jump 104% to US$3.61. Before this latest update, the analysts had been forecasting revenues of US$1.4b and earnings per share (EPS) of US$4.04 in 2025. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a real cut to earnings per share numbers as well.

Check out our latest analysis for VSE

Despite the cuts to forecast earnings, there was no real change to the US$140 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the VSE's past performance and to peers in the same industry. The analysts are definitely expecting VSE's growth to accelerate, with the forecast 11% annualised growth to the end of 2025 ranking favourably alongside historical growth of 7.8% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.7% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that VSE is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on VSE after the downgrade.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with VSE, including its declining profit margins. Learn more, and discover the 2 other warning signs we've identified, for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies backed by insiders.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.