Little Defence company trading at 5.7x EBITDA forecasting doubling sales
Research report on highly ranked company from my A-Z list
Hi,
And welcome to my new article about one of my companies from A-Z database, which ranks among the highest in this particular country. Today it is about one european defence company that seems to be at inflection point amid high defence spending by Europe.
Defence is good & bad industry to be in. On one hand your contracts are usually entrenched and when you are in program, you usually stay in the program. On the other hand the pricing is usually capped and you work solely on volumes. Your unit economics is fulfilled at some point. Organic growth is low and customer concentration is high. Lost Program is hard to replace.
Clearance and audit are needed and it is not an easy process. Especially when your end customer is defence force for a particular nation. But it is also a place for people to take salary home for the lifetime without a huge need to worry about their jobs.
Today I will have a look at EU company exposed to defence spend, which is on the rise and should be for the next decade. I want to know every defence company out there. There are few write-ups on this company out there, but I think I noticed a thing no other investor did.
Summary of investment thesis
They have partnership with industry leader through a company they acquired recently
Exposed to defence spending tailwind - majority of sales come from defence sector
The company found extremely accretive deals
Guides for significant growth in sales for 2025 & 2026
Trades at 5.7x EV/EBITDA
Only 4 people tweeted about it
But there are some flaws that have not been adressed by anyone else writing about this company
You already know which company from our chat, but lets get to it.