The CFO made a stupid comment during the earnings call - AMTM is ridiculously cheap & the stock was up until he said something about cuts to government spending with the new admin...actually, the new admin is bullish for spending & firms like AMTM - more will get outsourced & military/security spending will increase...the stock was actually halted at one point - the cfo should have been more tactful - was a stupid mistake!
Great insight! I had the same feeling when listening to the call this morning. It surprised me. Others like LDOS sold off as well, though not nearly as much.
Tin foil hat... they guided 244M shares diluted for next year which implies about 700K RSUs / options. We don't have a proxy yet. I think mgmt may be incentived for the stock to drop so they can pick up cheaper TSR based PSUs.
The sell off was driven by a <1.0x book-to-bill and really light F25 revenue guidance. Sell off was unwarranted IMHO b/c you need to look at adjusted book to bill adding back protested contracts. On the rev guide... Its light on headwinds from the Jacobs legacy contract that they lost to Peraton. In theory, the contract headwind was known by the market, but it was more than I and most other buy siders I connected with expected. This is why the stock sold off and is a legitimate concern.
Thanks, I really appreciate your comments and the color.
I thought the revenue guidance for FY 2025 wasn't too bad given the legacy contract headwinds baked in, and near-term challenges such as government budget cycles and contract transitions. There's always a queue of protested contracts, and I agree with your point on adjusting for those.
The guidance may simply be more cautious than weak. To your point, the selloff I think is unwarranted. Backlog also does not include any IDIQ task orders, and they have more than 40 contract vehicles totaling near $450 billion now. The backlog coverage is still pretty good - around 3.2x IIRC.
AMTM is also a spin-off / merger / IPO and these transactions can provide some dislocation in value. AMTM provides a bit less valuable service compared to some competitors but still critical/necessary.
QoQ the trend is getting better (versus YoY). The RPOs increased to $12.9 billion from $11.5 billion. That's also up from the combined RPO a year ago of $12.5 billion.
It's interesting to get some other perspectives on AMTM. Look forward to any other comments you may have.
Agree with all this. The sell off was shocking relative to the negative news.
I totally agree on the spin creating a dislocation. If you're a Jacobs shareholder, this thing showed up in your brokerage a few months ago, is really hard to analyze, looks super levered, and then immediately took a huge drop on DOGE, and then had a quarter of weak bookings and soft guidance. imho uninformed shareholders are puking it out to mitigate risk... its wild. This is SO good at this price.
The CFO made a stupid comment during the earnings call - AMTM is ridiculously cheap & the stock was up until he said something about cuts to government spending with the new admin...actually, the new admin is bullish for spending & firms like AMTM - more will get outsourced & military/security spending will increase...the stock was actually halted at one point - the cfo should have been more tactful - was a stupid mistake!
Great insight! I had the same feeling when listening to the call this morning. It surprised me. Others like LDOS sold off as well, though not nearly as much.
Appreciate the comment!
Tin foil hat... they guided 244M shares diluted for next year which implies about 700K RSUs / options. We don't have a proxy yet. I think mgmt may be incentived for the stock to drop so they can pick up cheaper TSR based PSUs.
Seems plausible. The stock sure looks undervalued to me. Not without risk of course.
Sure happy to connect.
The sell off was driven by a <1.0x book-to-bill and really light F25 revenue guidance. Sell off was unwarranted IMHO b/c you need to look at adjusted book to bill adding back protested contracts. On the rev guide... Its light on headwinds from the Jacobs legacy contract that they lost to Peraton. In theory, the contract headwind was known by the market, but it was more than I and most other buy siders I connected with expected. This is why the stock sold off and is a legitimate concern.
Thanks, I really appreciate your comments and the color.
I thought the revenue guidance for FY 2025 wasn't too bad given the legacy contract headwinds baked in, and near-term challenges such as government budget cycles and contract transitions. There's always a queue of protested contracts, and I agree with your point on adjusting for those.
The guidance may simply be more cautious than weak. To your point, the selloff I think is unwarranted. Backlog also does not include any IDIQ task orders, and they have more than 40 contract vehicles totaling near $450 billion now. The backlog coverage is still pretty good - around 3.2x IIRC.
AMTM is also a spin-off / merger / IPO and these transactions can provide some dislocation in value. AMTM provides a bit less valuable service compared to some competitors but still critical/necessary.
QoQ the trend is getting better (versus YoY). The RPOs increased to $12.9 billion from $11.5 billion. That's also up from the combined RPO a year ago of $12.5 billion.
It's interesting to get some other perspectives on AMTM. Look forward to any other comments you may have.
Agree with all this. The sell off was shocking relative to the negative news.
I totally agree on the spin creating a dislocation. If you're a Jacobs shareholder, this thing showed up in your brokerage a few months ago, is really hard to analyze, looks super levered, and then immediately took a huge drop on DOGE, and then had a quarter of weak bookings and soft guidance. imho uninformed shareholders are puking it out to mitigate risk... its wild. This is SO good at this price.
100% agree.
Thanks again for the color on the backlog. Happy to compare notes going forward, if you want to DM.