John Leonard, CFA
Special situations, micro-cap, contrarian, CFA

NCI Is An Undervalued Defense Contractor With Multiple Catalysts

Key takeaways

  • NCI (NASDAQ:NCIT) trades at a low single-digit EBITDA multiple due to fears of lower defense spending.
  • However, these fears are unwarranted given its focus on niche and high priority programs.
  • Strong cash flow and a lower debt load allow NCIT to survive the current challenging environment while a "hidden value" in the form of its fast growing healthcare division provides the potential for significant value extraction.

Company overview

NCIT provides enterprise services and solutions to defense, intelligence, healthcare and civilian government agencies. NCIT operates in more than 100 locations globally and generates a majority of its revenue from contracts with the U.S. federal government.

The eight core service offerings are below:

Source: Company website

Lack of...

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