By: Carter Copeland 

The current bull case for Defense is predicated on revenue upside more than any time we can recall since the height of the wars last decade. We think much of this has to do with less conviction around valuations following 2018 underperformance as well as a lack of identifiable margin upside across much of the group. The most common upside case centers around what’s known as the “outlay gap”, or the amount that DoD cash outlays need to grow to “catch up” with prior year appropriations. Since recent DoD outlays have been growing in the double digits, many we speak to wonder why they can’t simply drop those rates in their models…

Report Here