Chantilly, Virginia-based Amentum Holdings, Inc. (AMTM) provides engineering and technology solutions to the U.S. and allied government agencies. Valued at a market cap of $5.2 billion, the company offers supporting programs of critical national importance across energy, environmental, intelligence, space, defense, civilian, and commercial end-markets.
Shares of this engineering company have lagged behind the broader market over the past six months. AMTM has declined 11.1% over this time frame, while the broader S&P 500 Index ($SPX) has fallen 1.3%. Nonetheless, on a YTD basis, the stock is up 1.1%, outperforming SPX’s slight return.
Narrowing the focus, AMTM has also underperformed the iShares U.S. Industrials ETF’s (IYJ) 3.1% drop over the past six months and 4% rise on a YTD basis.
On May 6, AMTM released better-than-expected Q2 results. Its revenue on a pro forma basis grew marginally year-over-year to $3.5 billion and exceeded the consensus estimates by 1.5%. Moreover, its adjusted EPS of $0.53 improved 3.9% from the year-ago quarter and surpassed Wall Street expectations by 10.4%. Improved operating performance led to a rise in adjusted EBITDA across both its reportable segments. Yet, its shares plunged 4.5% in the following trading session.
Looking ahead to fiscal 2025, AMTM expects revenue to be between $13.9 billion and $14.2 billion, and projects adjusted EPS in the range of $2 to $2.20.
For the current fiscal year, ending in September, analysts expect AMTM’s EPS to grow 5.5% year over year to $2.12. The company’s earnings surprise history is promising. It topped the consensus estimates in each of the last three quarters.
Among the eight analysts covering the stock, the consensus rating is a “Moderate Buy” which is based on three “Strong Buy,” one “Moderate Buy,” three “Hold,” and one “Moderate Sell” rating.
This configuration is slightly more bullish than a month ago, with two analysts suggesting a “Strong Buy” rating.
On May 21, RBC Capital analyst Ken Herbert maintained a “Sector Perform” rating on AMTM and raised its price target to $24, which indicates a 12.9% potential upside from the current levels.
The mean price target of $25.38 represents a 19.4% premium from AMTM’s current price levels, while the Street-high price target of $30 suggests a notable upside potential of 41.2%.
