Amentum Holdings Inc. (NYSE:AMTM) is one of the best stocks for beginners with little money in 2026. On February 9, Amentum Holdings reported a steady start to FY2026, generating $3.24 billion in revenue and achieving a normalized growth rate of 3% in FQ1 2026. Despite navigating a government shutdown, the company maintained an adjusted EBITDA of $263 million with margins of 8.1%. The company’s expansion into high-growth sectors showed significant momentum, particularly in the nuclear energy market, whic ...

Amentum Holdings Inc. (NYSE:AMTM) is one of the high-growth industrial stocks to buy. On February 11, analysts at Citizens reiterated a Market Outperform and a $40 price target on Amentum Holdings Inc. (NYSE:AMTM). Diverse Capabilities and Merger Propel Amentum Holdings, Inc. (AMTM) to Robust Earnings Growth Christian Lagerek/Shutterstock.com The analysts remain bullish on the company’s outlook as it undergoes a transformative merger that has established it as a large service provider with diverse capab ...

Core Viewpoint - Amentum has been awarded a contract to enhance the UK's hypersonic strike capabilities through missile design engineering and program management expertise [1] Group 1: Contract Details - The contract, known as the Industry Mission Partner (IMP) contract, was awarded by Team Hypersonics UK, which is part of the Ministry of Defence [1] - The objective of the contract is to accelerate weapon development and enhance sovereign capabilities [1] Group 2: Collaboration and Strategic Importance - The contract aims to strengthen collaboration with Australia and the United States under the AUKUS agreement [1] - Amentum will establish a Joint Venture (JV) as part of this initiative [1]

Core Viewpoint - Amentum's first quarter fiscal 2026 financial results showed mixed performance, leading to a significant decline in stock price despite earlier gains in the year [2][5]. Financial Performance - Amentum reported adjusted diluted earnings per share (EPS) of $0.54, surpassing analyst expectations of $0.52 [5]. - The company's revenue for Q1 2026 was $3.24 billion, falling short of the anticipated $3.32 billion, marking a 5% year-over-year decrease [5]. - Amentum experienced negative free cash flow of $142 million in Q1 2026, a notable decline from the positive $102 million reported in Q1 2025 [7]. Market Reaction - Following the financial results announcement, Amentum's stock price dropped 19.9% from the end of trading last Friday to the close of Thursday's market session [3]. - Despite a 27.2% increase in stock price since the beginning of 2026, investor sentiment turned negative, leading to a sell-off [2]. Future Guidance - For fiscal 2026, Amentum provided a revenue forecast of $13.95 billion to $14.3 billion, indicating a year-over-year growth of about 3% [8]. - The company also projected adjusted EBITDA of $1.1 billion to $1.14 billion, reflecting a year-over-year growth of approximately 5% [8]. Valuation Considerations - Amentum's stock is currently trading at 75.2 times trailing earnings, suggesting that it may not be a bargain for investors at this time [9].

Core Viewpoint - Amentum Holdings (AMTM) has experienced a significant decline in market favor due to a revenue miss reported in its 1Q26 earnings, leading to a stock price drop of over 10% [1] Financial Performance - The company reported its 1Q26 earnings, which fell short of market expectations, prompting a negative reaction from investors [1] Market Reaction - Following the earnings report, Amentum's stock price plunged by more than 10%, indicating a strong market response to the revenue miss [1]

Core Insights - Amentum reported first-quarter revenue of $3.24 billion, with adjusted EBITDA of $263 million and an adjusted EBITDA margin of 8.1%, reflecting a year-over-year margin expansion of 40 basis points [1][3][6] - The company attributed margin expansion to strong program performance, reduced indirect spending due to cost synergies, and disciplined expense management during the government shutdown [1][4] - Amentum's underlying growth was characterized as approximately 3%, driven by new contract awards in critical digital infrastructure and space systems [2][4] Financial Performance - For the first quarter, Amentum's revenue was approximately $3.2 billion, with adjusted diluted EPS of $0.54, representing a 6% increase year-over-year [3][6] - The company reported a free cash flow use of $142 million, impacted by timing factors, but expressed confidence in meeting full-year free cash flow guidance [15] - Amentum ended the quarter with $247 million in cash and a fully undrawn $850 million revolver, with no near-term maturities [16] Strategic Wins and Guidance - Management highlighted significant contracts, including a $730 million contract from EDF Energy and a $995 million U.S. Air Force contract, while reaffirming fiscal 2026 guidance [5][16] - Net bookings for the quarter were $3.3 billion, resulting in a book-to-bill ratio of 1.0x for the first quarter and 1.1x for the last twelve months [7][8] - The backlog grew to over $47 billion, with funded backlog rising to nearly $7 billion, up 23% from the prior quarter [8][9] Market Focus and Growth Areas - Amentum emphasized its focus on accelerating growth markets, including space systems, critical digital infrastructure, and global nuclear energy [10][11] - The company reported nearly $1 billion in nuclear awards during the first quarter, with expectations for continued demand growth in both domestic and international markets [11][12] - Management noted that the timing of revenue from nuclear programs typically accelerates once construction begins, with peak revenue opportunities taking two to five years to materialize [12] Segment Performance - In Digital Solutions, revenue was $1.34 billion, up 4% year-over-year, while Global Engineering Solutions reported revenue of $1.9 billion, consistent with the prior year [14] - Adjusted EBITDA for Digital Solutions was $103 million, with a margin of 7.7%, and for Global Engineering Solutions, it was $160 million, with an 8.4% margin [14] Future Outlook - The company anticipates continued progress in core markets, with a focus on mix shift and margin improvement over time, acknowledging that changes in backlog will take time to reflect in results [19]

Economic Indicators - Nonfarm payrolls are expected to increase by +68,000 in January, with the unemployment rate remaining unchanged at 4.4% [1] - Average hourly earnings are projected to rise by +0.3% month-over-month and +3.7% year-over-year in January [1] - Initial weekly unemployment claims are anticipated to decrease by -7,000 to 224,000 [1] - Existing home sales in January are expected to decline by -4.3% month-over-month to 4.16 million [1] - January CPI is expected to rise by +2.5% year-over-year, with core CPI also expected to increase by +2.5% year-over-year [1] Retail Sales and Employment Costs - US December retail sales were unchanged month-over-month, falling short of expectations of +0.4% [2] - The employment cost index for Q4 rose by +0.7% quarter-over-quarter, which is the smallest increase in 4.5 years and below the expected +0.8% [2] Stock Market Performance - Stock indexes experienced mixed trading, with the Dow Jones reaching a new all-time high while the S&P 500 closed down -0.33% and the Nasdaq down -0.56% [6][5] - The broader market initially found support from weaker-than-expected retail sales and employment cost index reports, which lowered bond yields [5] Earnings Season Insights - Over half of the S&P 500 companies have reported earnings, with 78% beating expectations [7] - S&P earnings growth is expected to rise by +8.4% in Q4, marking the tenth consecutive quarter of year-over-year growth [7] - Excluding the Magnificent Seven tech stocks, Q4 earnings are projected to increase by +4.6% [7] Interest Rates and Bond Market - The markets are pricing in a 23% chance of a -25 basis point rate cut at the next Federal Reserve meeting [8] - The 10-year T-note yield fell to a 3.5-week low of 4.13%, supported by weaker-than-expected economic reports [9] Sector Performance - AI-infrastructure stocks faced pressure, with Western Digital down more than -7% and other tech stocks also declining [12] - Wealth-management stocks dropped significantly, with Raymond James Financial down more than -8% due to concerns over AI disruption [13] - Homebuilding stocks rose after the drop in mortgage rates, with Toll Brothers up more than +6% [14] Company-Specific Developments - Goodyear Tire & Rubber Co reported Q4 adjusted EPS of 39 cents, below the consensus of 49 cents, leading to a decline of more than -14% [15] - Incyte forecasted dull-year total net product revenue of $4.77 billion to $4.94 billion, causing a drop of more than -8% [16] - Spotify reported a record 38 million monthly active users in Q4, leading to a rise of more than +17% [17]

Core Insights - Amentum Holdings reported mixed Q1 2026 earnings, beating earnings per share expectations but missing sales forecasts, leading to a 9.6% drop in stock price [1][2] Financial Performance - The company reported earnings of $0.52 per share on a non-GAAP basis, but the GAAP earnings were $0.18 per share, significantly higher than last year's Q1 profit of $0.05 per share [3] - Sales declined by 5% year-over-year, but operating income improved by 5% due to enhanced profit margins, resulting in a 260% increase in profits per diluted share [2][3] - Free cash flow was negative, with Amentum burning $142 million in cash during the quarter [3] Future Outlook - Amentum forecasts a return to sales growth later in the year, projecting full-year sales could reach $14.3 billion, representing a 3% year-over-year growth [4] - Adjusted earnings are expected to grow by approximately 12% to $2.35 per share, with free cash flow anticipated to be around $550 million, also reflecting 12% growth [4] Valuation - The company's enterprise value stands at $12.6 billion, implying a 23x EV-to-FCF ratio, which is considered high given the projected 12% growth [5]

Financial Data and Key Metrics Changes - Revenue for the quarter was $3.2 billion, reflecting normalized growth of 3% year-over-year [7][20] - Adjusted EBITDA was $263 million, with margins of 8.1%, a 40 basis points increase year-over-year [20] - Adjusted diluted earnings per share increased by 6% to $0.54 [7][20] Business Line Data and Key Metrics Changes - Digital Solutions revenue was $1.34 billion, representing 4% growth, and adjusted EBITDA increased to $103 million with margins of 7.7% [20] - Global Engineering Solutions revenue was $1.9 billion, with adjusted EBITDA of $160 million and margins of 8.4%, reflecting an 80 basis points year-over-year increase [20] Market Data and Key Metrics Changes - The company reported $3.3 billion in net bookings, resulting in a book-to-bill ratio of 1x for the quarter and 1.1x for the last 12 months [8] - The backlog grew by 4% to over $47 billion, with $23 billion in proposals awaiting award [8] Company Strategy and Development Direction - The company is focused on three accelerating growth markets: space systems and technologies, critical digital infrastructure, and global nuclear energy, which are expected to drive long-term growth [12][14] - Amentum aims to prioritize higher-margin work and has seen significant contract wins in the nuclear energy sector, including a $730 million contract with EDF Energy [10][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving fiscal year 2026 outlook and long-term strategic growth objectives despite challenges from the government shutdown [5][16] - The company anticipates strong free cash flow in the second quarter and remains confident in meeting full-year guidance [22][24] Other Important Information - The company has a healthy liquidity position with $247 million in cash and an undrawn $850 million revolver [22] - A recent credit rating upgrade from Moody's is expected to reduce interest expenses and enhance financial flexibility [23] Q&A Session Summary Question: Free cash flow progression through the year - Management noted that Q1 cash performance was impacted by timing-related issues, including an additional pay cycle and government holiday closures, but expects strong free cash flow in the second quarter [28][29] Question: Award outlook by end market - Management highlighted an uptick in funded backlog and expressed confidence in achieving a full-year book-to-bill greater than one, with significant awards expected from accelerating growth markets [32][34] Question: Nuclear business contribution to revenue and profit growth - Management indicated that while nuclear represents a smaller portion of overall revenue, recent contract awards are expected to positively impact margins over time [38][39] Question: Cash flow requirements for joint ventures - Management explained that the large contributions to equity method investments in Q1 were due to initial capital contributions for joint ventures, which are not expected to continue at that level [45] Question: Margin performance in Global Engineering Solutions - Management attributed the improved margins to strategic prioritization of higher-margin work and strong program performance, while also acknowledging the impact of government shutdown timing [46][47] Question: Opportunities and challenges in NASA contracts - Management expressed excitement about supporting NASA's Artemis II mission and emphasized alignment with new leadership's focus on successful mission delivery and cost constraints [81][83]

Financial Performance - Revenue for the quarter was $3.2 billion, reflecting normalized growth of 3% year-over-year [7][20] - Adjusted EBITDA was $263 million, with margins of 8.1%, representing a 40 basis points year-over-year increase [20] - Adjusted diluted earnings per share increased by 6% year-over-year to $0.54 [20] Business Line Performance - Digital Solutions segment generated revenue of $1.34 billion, a 4% increase, with adjusted EBITDA of $103 million and margins of 7.7% [20] - Global Engineering Solutions reported revenue of $1.9 billion, with adjusted EBITDA of $160 million and margins of 8.4% [20] Market Performance - The company secured $3.3 billion in net bookings, resulting in a book-to-bill ratio of 1x for the quarter and 1.1x for the last 12 months [8] - The backlog grew by 4% to over $47 billion, with $23 billion in proposals awaiting award [8] Company Strategy and Industry Competition - Amentum is focused on three accelerating growth markets: space systems and technologies, critical digital infrastructure, and global nuclear energy [12] - The company aims to prioritize higher-margin work and has seen robust demand in nuclear energy, with nearly $1 billion in awards in the first quarter [9][39] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in achieving fiscal year 2026 outlook and long-term strategic growth objectives despite challenges from the government shutdown [5][16] - The company anticipates strong free cash flow in the second quarter and reaffirms full-year guidance for revenue and adjusted EBITDA [24][25] Other Important Information - The company has a healthy liquidity position with $247 million in cash and an undrawn $850 million revolver [22] - Amentum received a credit rating upgrade from Moody's, reducing interest expenses and enhancing financial flexibility [23] Q&A Session Summary Question: Free cash flow progression and potential receivables sales - Management noted that Q1 cash performance was impacted by timing-related factors, with expectations for strong free cash flow in the second quarter [28][29] Question: Award outlook by end market - Management highlighted an increase in funded backlog and expressed confidence in achieving a full-year book-to-bill greater than one [33][34] Question: Nuclear business impact on revenue and profit growth - Management indicated that while nuclear contracts will take time to significantly impact quarterly results, they expect positive contributions on a year-over-year basis [38][39] Question: Impact of joint ventures on cash flow - Management clarified that the large contributions to equity method investments in Q1 were due to initial capital contributions for joint ventures, which are expected to normalize [45] Question: Opportunities and challenges in NASA contracts - Management expressed excitement about supporting NASA's Artemis II mission and emphasized alignment with new leadership's goals for cost and schedule efficiency [81][84]