Large Defense Corporation Secures $4.3 Billion Contract with $1.5 Billion Investment Stock
In the dynamic world of defense contracting, a new player has emerged, capturing the attention of investors and industry watchers alike. This is the story of V2X, a small-cap defense company formed from the merger of Vectrus and Vertex Aerospace in 2022.
V2X made headlines in 2021 when it secured a significant contract, worth $3.7 billion over five years, to provide readiness capabilities to the U.S. Army. This contract, averaging $740 million per year, has set the stage for V2X's growth.
Fast forward to early 2025, and V2X has continued to impress. The company was recently awarded another Pentagon defense contract, worth $4.3 billion, on July 31. This contract, for the contractor operated and maintained supply service for T-6 training jets, spans over the next 10 years, ending on July 31, 2034. The combined value of these two contracts amounts to a staggering $8 billion.
As of the article's publication, V2X boasts a market capitalization of $1.8 billion. Analysts estimate the company might earn $73 million this year, with V2X reporting profits of $30.5 million over the last two years. These figures suggest a promising financial future for the company.
Moreover, V2X's free cash flow is forecasted to nearly double in two years, potentially generating $135 million in positive free cash flow this year. This growth is expected to continue, with V2X's profit margin and per-share profits forecasted to double over the next three years.
Despite the lack of publicly available information on the exact size of V2X's management team, the company's success is undeniable. V2X beat out two other bidders to win the initial Army contract, demonstrating its competitive edge in the industry.
The author, intrigued by V2X's lofty predictions, plans to update on the company's progress in the future. As V2X continues to make waves in the defense sector, it remains a company worth watching for investors and industry observers alike.
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