A report by Wells Fargo Securities says that while investors like to see the growth and visibility of the government services industry, they also want more information to help them differentiate private sector players holding large contracts.
WFS analysts Ed Caso and Justin Donati noted in the report the nature of multiyear, multiple-award and indefinite-delivery/indefinite-quantity contracts could make it difficult for an investor to interpret award activity, book-to-bill ratio, annual revenue contribution and amount of new opportunity.
One investor recommended that industry players offer annual contract value estimates.
“It is time for next level of disclosure, in our view, for the group shares to sustain,” said Caso and Donati.
They added that secondary metrics for revenue outlook as well as earnings before interest, tax, depreciation and amortization are among the factors to consider when assessing large awards.