Long-Term Sector Valuation Trends and Company Performance

Some key observations on long-term valuation trends and company performance:

• Aggregate valuation across Fairmont’s aerospace-defense-government services index (124 publicly traded companies) is ~12x TEV:EBITDA, vs ~5x mid-2009
• Minimal aggregate valuation differences across the sectors (aerospace / defense/ government services)
• The number of companies exhibiting negative market performance over both the past year and the past three years has dropped to fifteen, vs thirty a year ago
• Mercury Systems, Leidos, Heico, Ducommun stand out as star performers – though many companies have seen dramatically improved near-term market gains

For executives and investors the questions arise: how to sustain positive business momentum as underlying market dynamics evolve, how to deploy capital most effectively amid high valuations, what to buy and what to sell across portfolios of businesses and capabilities.

Solutions to these issues and more can be found in the full report.