PAE

PAE Incorporated

Industrial/Transportation, SPAC


Presented:09/01/2020
Price:$8.90
Cap:$0.82B
Current Price:$10.05
Cap:$0.94B

Presented

Date09/01/2020
Price$8.90
Market Cap$0.82B
Ent Value$1.52B
P/E Ratio168.24x
Book Value$1.21
Div Yield0%
Shares O/S92.04M
Ave Daily Vol697,800
Short Int15.22%

Current

Price$10.05
Market Cap$0.94B
PAE, Inc. provides agile and steadfast solutions to the U.S. government and its allies. Its services include business process solutions, counter-threat solutions, infrastructure and logistics, intelligence solutions, international logistics and stabilization, readiness and sustainment team, claims processing, immigration, identity and verification, litigation support, records and mail management, and shared services and contact centres. The company is headquartered in Falls Church, VA.

Publicly traded companies mentioned herein: Leidos Holdings Inc (LDOS), PAE Inc (PAE)

Highlights

The presenter is long shares of PAE Inc (PAE), a government services contractor founded in 1955 that recently went public through a SPAC. After IPOing at $10 per share and reaching just under $12 per share pre-COVID, PAE traded down sharply to ~$3.50 but has since crept back up to ~$9 per share. He sees a multiyear transformation story centered around a strong growth runway, margin expansion, and FCF generation. Although PAE isn’t as exciting a name as missile company Leidos (LDOS), the presenter feels that PAE’s ~9x 2021 FCF multiple is low given its long history of durability and its potential opportunity going forward. Government services peers trade at 12x – 20x, and he thinks if PAE continues to execute its share price can reach $13 – $14 by the end of year. 

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