Command Security Is Attractive With The Multiple Still In 'Shock' Despite 2 Major Threats Being Neutralized
- Command Security is down ~30% from the peak last fall due to the loss of a key contract and slight gross margin compression due to increasing competitive pressures.
- However, the lost contract (which had been extended 4x) has already been replaced through new business wins and contract renewals.
- There is scope for incremental operating margin expansion over the next two years through providing higher value-added services and as one-off G&A expenses drop off.
- A minority investment in a U.K.-based security provider with complimentary services and recent ability to bid on new federal government contracts further extends the growth runaway.
- The strong free cash flow enables continued deleveraging and share repurchases.