Critical Analysis: Loar (NYSE:LOAR) and VSE (NASDAQ:VSEC)

VSE (NASDAQ:VSEC) and Loar (NYSE:LOAR) are both mid-cap industrials companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, dividends, profitability, earnings, institutional ownership, risk and analyst recommendations.

Analyst Ratings

This is a summary of current ratings and target prices for VSE and Loar, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
VSE	0	3	8	1	2.83
Loar	0	3	4	0	2.57

VSE presently has a consensus price target of $246.67, indicating a potential upside of 2.07%. Loar has a consensus price target of $88.00, indicating a potential upside of 22.21%. Given Loar’s higher probable upside, analysts plainly believe Loar is more favorable than VSE.

Valuation & Earnings

This table compares VSE and Loar”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
VSE	$1.11 billion	6.10	$11.70 million	$3.12	77.46
Loar	$586.17 million	11.51	$72.15 million	$0.72	100.01

Loar has lower revenue, but higher earnings than VSE. VSE is trading at a lower price-to-earnings ratio than Loar, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

VSE has a beta of 1.23, indicating that its stock price is 23% more volatile than the S&P 500. Comparatively, Loar has a beta of 0.57, indicating that its stock price is 43% less volatile than the S&P 500.

Institutional & Insider Ownership

91.5% of VSE shares are owned by institutional investors. 1.8% of VSE shares are owned by insiders. Comparatively, 20.1% of Loar shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares VSE and Loar’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
VSE	6.17%	6.71%	4.76%
Loar	11.60%	9.37%	5.39%

Summary

Loar beats VSE on 8 of the 15 factors compared between the two stocks.

About VSE

VSE Corporation operates as a diversified aftermarket products and services company in the United States. The company operates through two segments, Aviation and Fleet. The Aviation segment provides aftermarket parts supply and distribution; maintenance, repair, and overhaul services for components and engine accessories supporting commercial, business, and general aviation operators. This segment serves commercial airlines, regional airlines, cargo transporters, MRO integrators and providers, aviation manufacturers, corporate and private aircraft owners, and fixed-base operators. The Fleet segment offers parts supply, inventory management, e-commerce fulfillment, logistics, supply chain support, and other services to support the commercial aftermarket medium- and heavy-duty truck market. This segment also provides sale of vehicle parts and supply chain services to support client truck fleets, as well as sustainment solutions and managed inventory services to government and commercial truck fleets. VSE Corporation was incorporated in 1959 and is headquartered in Alexandria, Virginia.

About Loar

Loar Holdings Inc., through its subsidiaries, designs, manufactures, and markets aerospace and defense components for aircraft, and aerospace and defense systems in the United States and internationally. It offers products in various categories, which include airframe components, structural components, avionics, composites, braking system components, de-ice and ice protection, electro-mechanical, engineered materials, flight controls, fluid and motion controls, environmental, metal forming, molded components, and restraints and safety devices. The company also provides auto throttles, lap-belt airbags, two-and three-point seat belts, water purification systems, fire barriers, polyimide washers and bushings, latches, hold-open and tie rods, temperature and fluid sensors and switches, carbon and metallic brake discs, fluid and pneumatic-based ice protection, RAM air components, sealing solutions, actuation devices, and others. It primarily serves commercial, business jet and general aviation, and defense markets. Loar Holdings Inc. was founded in 2017 and is headquartered in White Plains, New York.