ManTech International Is Likely For Sale – Should You Buy The Stock? (NASDAQ:MANT)

That IRR potential tho

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Priced In?

ManTech International (MANT), a smaller player in the federal service provider marketplace with a focus on security-cleared clients, is in essence up for sale. The retired founder has appointed Goldman Sachs to explore a sale of his controlling stake. (We flagged a while back that this might happen – see our note here from September 2020… we were a little clearly early!)

If you own MANT shares, as we do in staff personal accounts, you might consider holding them into any possible announcement. We would be very surprised if the company was not sold – it’s a digestible size for many financial buyers and would add to the cybersecurity capability to any strategic acquirer. And that means that from here we might see 20%, maybe 30% upside as any deal is priced at a premium to the recent stock price. Potential good news if you own MAINTAIN already.

But should you buy a new position now, or add to existing holdings? Fundamental performance has been steadily weakening.

MANT Financials

MANT Financial Table (Company SEC filings, YCharts.com, Cestrian Analysis)

Valuation is mutated on a revenue multiple but in truth that’s because the cash flow margins are presently so weak – 27x TTM unlevered pretax FCF for a business achieving TTM revenue growth of 1% is punchy indeed. (As of today’s close, the market is asking you to pay just 10.1x unlevered pretax FCF for Meta Platforms (FB), which is growing revenue at 38% on a TTM basis – sources, company SEC filings, YCharts.com, Cestrian Analysis .)

MANT Valuation

MANT Valuation Table (Company SEC filings, YCharts.com, Cestrian Analysis)

And the stock chart is extended – the stock is sitting right below resistance. (Full page chart, here).

MAINT Chart

HOLD Stock Chart (TradingView, Cestrian Analysis)

So in summary:

  • There’s a war on
  • The founder has put the company up for sale
  • Fundamentals are weakening
  • The stock is sitting beneath resistance

Not an obvious buy is it? So we’re happy to hold in anticipation of a sale, but we won’t be adding to our holdings at this price, nor would we start a new position at this price. Neutral rating.

Cestrian Capital Research, Inc. – 7 March 2022.

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