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VSE (VSEC): analysis traps
Where its figures could mislead a reader, and what to check before taking them at face value · Data: Q3 2026, to Sep 30, 2026, filed Nov 5, 2026; rules v1.1
VSE (VSEC): 0 rules of 10 triggered on the filings to Sep 30, 2026. 2 to review; 1 with insufficient data; 2 not applicable. Each is a question to verify, with the normal explanation that would produce the same figures.
Check these first
Low P/E at a cyclical peak = undervalued To review · confidence medium
Net income of $127M is at a high against a median of $28M over eight years; at 43.2× the market is not pricing it as cheap, but a multiple on this year's profit still understates the mid-cycle one (195.8×).
A precise DCF value = the true value To review · confidence high
The DCF's point value is 100.01 a share (price 172.81); 67% of it is the terminal value, a number about years no one has seen. Moving operating margin by ±3 pts alone takes it from 68.62 to 131.40; across every method the research ran the range is 3 to 590. The value is a range; the decimals are not information.
Innocent reading: A stable, mature business with a narrow range of outcomes, where the point value is a fair summary.
Every rule
A01 FCF growth = the business improved Not triggered confidence medium
Free cash flow rose $58M to $6M; working capital and lower capex explain 14% of it, so most of the gain is in operating cash flow itself.
The figures and how they are read
| Fiscal year before | FY2024 |
| Fiscal year | FY2025 |
| Operating cash flow, year before | −$31M |
| Operating cash flow | $27M |
| Capex, year before | $22M |
| Capex | $21M |
| Free cash flow, year before | −$53M |
| Free cash flow | $6M |
| Change in FCF | $58M |
| Change in capex | −$350K |
| Working capital: change in its cash contribution | $8M |
| Of which: capex cut | $350K |
| Of which: working capital released | $8M |
| Share of the increase that need not repeat | +13.9% |
| Operating cash flow before working capital: change | 50272000.00 |
FCF = operating cash flow − cash capex; ΔFCF = ΔOCF − ΔCapEx; the working-capital part is the change in the cash-bridge items (receivables, inventory, payables, accruals), with the sign of the cash flow statement
Source: FY2025 (cash flow statement, fiscal year) · FY2024 (cash flow statement, fiscal year before)
A07 Stock compensation added back = no economic cost Not triggered confidence high
Stock compensation is 1.2% of revenue: small enough that adding it back changes little.
The figures and how they are read
| Fiscal year | FY2025 |
| Stock compensation | $13M |
| Revenue | $1.1B |
| SBC / revenue | +1.1% |
| Buybacks | 0 |
| Buybacks / SBC | 0.0 |
| Diluted shares, year before | 18.0M shares |
| Diluted shares | 21.2M shares |
| Diluted shares: change | +18.2% |
SBC / revenue from the cash flow statement's add-back; the diluted weighted share count year over year; buybacks from the financing section
Source: FY2025 (stock compensation, buybacks and the diluted share count, fiscal year)
B02 Receivables growing = future cash is certain Not triggered confidence medium
Receivables grew 62% against revenue 91% in Q3 2026; DSO 48 against a median of 58: collections are keeping pace with sales.
The figures and how they are read
| Quarter | Q3 2026 |
| Revenue, year over year | +91.2% |
| Receivables, year over year | +61.7% |
| Quarter before | Q2 2026 |
| Revenue y/y, quarter before | +65.0% |
| Receivables y/y, quarter before | +49.9% |
| Days sales outstanding | 47.6 |
| DSO, median of eight quarters | 57.6 |
| Receivables | $285M |
| Revenue | $541M |
receivables and revenue against the same quarter a year earlier; DSO = receivables / quarterly revenue × days, against the median of the eight quarters before
Source: Q3 2026 (receivables and revenue) · Q3 2025 (the same quarter a year earlier)
B08 Adjusted profit = economic profit Insufficient data
no reconciliation table read from the releases yet and fewer than three quarters with both an adjusted and a GAAP EPS
C02 Low net debt = no refinancing risk Not triggered confidence medium
$8M comes due within a year, 12.4× covered by cash and investments of $66M plus $27M of free cash flow.
The figures and how they are read
| Cash and investments | $66M |
| Debt | $960M |
| Net debt | $894M |
| Due within a year | $8M |
| Read from | the debt maturity table |
| Free cash flow, twelve months | $27M |
| Cash plus free cash flow | $93M |
| Coverage of what is due | 12.4 |
| Due in the second year | $11M |
| Balance sheet date | 2026-09-30 |
due within a year from the maturity table (else the current portion of debt), against cash and investments plus free cash flow over the last twelve months (zero if negative); no credit lines assumed
Source: FY2025 (debt maturities, cash and investments)
D03 EPS growth = profit growth Not triggered confidence high
EPS rose 691% and net income rose 1108% in Q3 2026; the share count rose 53.2%: EPS growth follows profit growth.
The figures and how they are read
| Quarter | Q3 2026 |
| Quarter before | Q3 2025 |
| EPS, year before | $0.19 |
| EPS | $1.49 |
| Net income, year before | $4M |
| Net income | $47M |
| Diluted shares, year before | 20.8M shares |
| Diluted shares | 31.8M shares |
| EPS growth | +691.0% |
| Net income growth | +1108.2% |
| Diluted shares: change | +53.2% |
| eps from profit | $2.09 |
| eps from share count | -$0.79 |
EPS and net income against the same quarter a year earlier; the EPS bridge attributes the change to profit first, then to the share count (the order is fixed and disclosed)
Source: Q3 2026 (net income, diluted shares, EPS) · Q3 2025 (the same quarter a year earlier)
E02 Low P/E at a cyclical peak = undervalued To review confidence medium
Net income of $127M is at a high against a median of $28M over eight years; at 43.2× the market is not pricing it as cheap, but a multiple on this year's profit still understates the mid-cycle one (195.8×).
The figures and how they are read
| market value | $5.5B |
| net income ttm | $127M |
| pe ttm | 43.20 |
| net income median fy | $28M |
| pe mid cycle | 195.80 |
| net income peak fy | $39M |
| years | FY2018 / 35.0; FY2019 / 37.0; FY2020 / -5.0; FY2021 / 8.0; FY2022 / 28.0; FY2023 / 39.0; FY2024 / 15.0; FY2025 / 12.0 |
| down years in window | 3 |
P/E on the trailing twelve months' net income against the P/E on the median net income of the last eight fiscal years (a mid-cycle stand-in); 'at a peak' = this year's profit at or above 90% of the best year and at least 1.3× the median
Source: Q3 2026 (net income, trailing twelve months)
What would show the trap does not apply
- Profit holds at this level through the next two years (the eight-year peak was a new base, not a top)
- The industry's capacity and prices stay where they are rather than reverting
Look again: next filing.
E07 A precise DCF value = the true value To review confidence high
The DCF's point value is 100.01 a share (price 172.81); 67% of it is the terminal value, a number about years no one has seen. Moving operating margin by ±3 pts alone takes it from 68.62 to 131.40; across every method the research ran the range is 3 to 590. The value is a range; the decimals are not information.
The figures and how they are read
| dcf value | 100.01 |
| price | 172.81 |
| terminal value share | +67.4% |
| swing by input | Operating margin / ±3 pts / 68.62 / 131.4; Revenue growth (each year) / ±5 pts / 80.22 / 122.96; WACC / ±1 pt / 85.35 / 119.08; Tax rate / ±5 pts / 91.84 / 108.19 |
| range all methods | 2.81; 589.53 |
the DCF's point value against the share of it that is the terminal value and the value at each input moved by one step (growth ±5 pts, WACC ±1 pt, margin ±3 pts …); the range across every method the research ran
Source: 2026-11-08 (valuation research)
What would explain it innocently
- A stable, mature business with a narrow range of outcomes, where the point value is a fair summary
- The inputs that matter most are themselves well known (a regulated return, a long contract)
What to look for in the filing
- Which input you believe differs from the research's and why
- What the price implies for growth (the reverse DCF on the fair-value page)
What would show the trap does not apply
- The DCF's value is robust to the terminal growth and discount rate (the range's low end is still above the price)
- The company's cash flows over the next three years track the DCF's early years
Look again: next filing.
J06 A bank's low P/E and high profit = safe Not applicable
not a bank
J08 A REIT's low net income = the dividend is unsafe Not applicable
not a REIT
What the statuses mean
Triggered: the filings show the pattern; read the normal explanations and the missing evidence before concluding anything. To review: one quarter or a weak signal; a reader's judgement, not a pattern. Not triggered: the pattern is absent on these figures. Insufficient data: the filings read so far do not hold what the rule needs; this is not a clean bill. Not applicable: the rule is not meant for this kind of company (a bank's working capital, a loss-making quarter's EPS growth). Out of date: the latest filing is more than fifteen months old.
Severity is what the pattern could mean for cash, value or solvency; confidence is how reliable the inputs and the reading are. The two are kept apart.
Record a view
A reader's judgement, grounds, what would change it and the next review; kept in the browser (needs JavaScript).
Every rule and the companies it triggers on → VSE: cash flow → Earnings quality score →
Each rule reads the company's own filings by a fixed formula and says what would explain the same figures innocently. A triggered rule is a question to verify, not a finding of manipulation, and not a view on the stock. Missing data is shown as missing, never as clear. Not investment advice.