VSE Corporation currently trades at $135.70 and has been a dream stock for shareholders. It’s returned 361% since June 2020, blowing past the S&P 500’s 102% gain. The company has also beaten the index over the past six months as its stock price is up 38.8% thanks to its solid quarterly results.
Is there a buying opportunity in VSE Corporation, or does it present a risk to your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free.
Why Is VSE Corporation Not Exciting?
Despite the momentum, we don't have much confidence in VSE Corporation. Here are three reasons why VSEC doesn't excite us and a stock we'd rather own.
1. Low Gross Margin Reveals Weak Structural Profitability
All else equal, we prefer higher gross margins because they usually indicate that a company sells more differentiated products and commands stronger pricing power.
VSE Corporation has bad unit economics for an industrials business, signaling it operates in a competitive market. As you can see below, it averaged a 12.3% gross margin over the last five years. That means VSE Corporation paid its suppliers a lot of money ($87.73 for every $100 in revenue) to run its business. 
2. Cash Burn Ignites Concerns
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
VSE Corporation’s demanding reinvestments have drained its resources over the last five years, putting it in a pinch and limiting its ability to return capital to investors. Its free cash flow margin averaged negative 3.6%, meaning it lit $3.61 of cash on fire for every $100 in revenue.
3. Previous Growth Initiatives Haven’t Impressed
Growth gives us insight into a company’s long-term potential, but how capital-efficient was that growth? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).
VSE Corporation historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 5%, somewhat low compared to the best industrials companies that consistently pump out 20%+.
Final Judgment
VSE Corporation’s business quality ultimately falls short of our standards. With its shares beating the market recently, the stock trades at 37.1× forward P/E (or $135.70 per share). This valuation tells us a lot of optimism is priced in - you can find more timely opportunities elsewhere. Let us point you toward a top digital advertising platform riding the creator economy.
Stocks We Would Buy Instead of VSE Corporation
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
