A Member of Pat McKeough’s Inner Circle recently asked for his advice on a leading provider of aftermarket aviation parts distribution and maintenance, repair, and overhaul (MRO) services in support of commercial, business, and defense aviation.
Pat likes the exposure to a pure-play aviation thesis benefiting from structural, multi-year tailwinds. He also likes the firm’s successful transformation into a higher-margin, asset-light specialist through the divestiture of legacy fleet business lines. However, Pat notes that growth by acquisition adds risk, and the stock trades at a somewhat high valuation.
VSE Corp. (Symbol VSEC on Nasdaq; www.vsecorp.com) is a leading provider of aviation distribution and repair services for the commercial, business and general aviation aftermarkets.
Headquartered in Miramar, Florida, the company provides aftermarket parts, along with distribution and maintenance, repair and overhaul (MRO) services for components and engine accessories. VSE services aircraft in 57 different countries, and its physical infrastructure is distributed across the U.S., Europe, Asia, and Australia.
The company continues to grow through complementary acquisitions.
In December 2024, it completed the purchase of Kellstrom Aerospace Group, paying $200 million. Kellstrom is a full-service aftermarket solutions provider of distribution and technical services for the commercial aerospace engine aftermarket.
In May 2025, VSE then acquired Turbine Weld for a total cash consideration of $50 million. That business specializes in MRO service for complex technical and proprietary engine components.
Most recently, in January 2026, VSE announced the acquisition of Precision Aviation Group from GenNx360 Capital Partners for $2.0 billion.
Precision Aviation was founded in 1996 and is headquartered in Atlanta, Georgia. The company is a global provider of aviation MRO services, distribution, and supply chain systems. It serves commercial and defence end markets.
Precision Aviation operates 29 locations worldwide, employs more than 1,000 people, serves over 10,000 customers globally, and completes more than 175,000 repairs annually. The company generated revenue of about $615 million in 2025.
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VSE’s robust profit generation drives compounding growth
In the three months ended June 30, 2026, VSE Corp.’s revenue increased by 65.0%, to $449.1 million from $272.1 million a year earlier. Revenue rose due to 14% organic growth driven by new business wins, expanded distribution agreements, market share gains, a bigger share of spending from existing customers, and strong commercial engine and aviation aftermarket demand, alongside meaningful contributions from recent acquisitions including Precision Aviation Group (PAG), NorthStar, and Aero 3.
Excluding one-time items, earnings rose 101.2% to $55.0 million, or $1.75 a share, from $27.4 million, or $1.32 a share, on a higher-profit-margin mix shift toward the repair side of the business and operating efficiencies across the combined business.
Going forward, Precision Aviation should be a good fit for VSE. The acquisition is expected to significantly expand its scale and enhance its engine and component service capabilities across the aviation aftermarket.
Note, however, that VSE trades at a somewhat high 23.4 times its 2026 forecast earnings of $6.79 a share; that adds risk.
Recommendation in Pat’s Inner Circle: VSE Corp. is okay to hold.
