Shrewd Deals Help ManTech: Under the Radar - TheStreet

FAIRFAX, Va. (TheStreet) --ManTech (MANT) - Get Report, a technology security firm that serves the government, has dropped 8% since we wrote about it on Sept. 2. But its shares are rebounding, helped by the U.S. military's plan to boost its presence in Afghanistan.

On November 12, ManTech secured a $286 million contract from the U.S. Army electronic proving ground at Fort Huachuca, Ariz. More recently, the company announced plans to buy privately held

Sensor Technologies

, which makes monitoring software for the military and sets up computer networks, for $242 million. Sensor Technologies expects to take in $450 million in revenue this year, helping ManTech's top and bottom lines.

While ManTech hasn't rewarded investors in the past year, the company's record of making sound, easy-to-integrate acquisitions suggests that might change. The company's focus on logistics and cyber security remain redeeming features.

Fairfax, Va.-based ManTech has grown net income 31% annually, on average, during the past three years. Revenue has climbed 21% during that time.

Third-quarter net income increased 23% to $29 million, or 81 cents a share, as revenue rose 6% to $515 million. ManTech's gross margin widened from 16% to 17%, and its operating margin expanded from 8% to 9%.

Those profit spreads are unimpressive relative to those of information technology peers. ManTech relies on the U.S. government for revenue, putting it at a disadvantage to more mainstream IT companies.

Still, its shares are cheaper than those its peers based on trailing earnings, projected earnings, book value, sales and cash flow. The stock has a beta, a measure of market correlation, of 0.2, which means it tends to ignore broader market trends.

Of 15 analysts surveyed by


, eight recommended buying ManTech and seven advise holding its shares. None advocated selling the stock. Although we favor other industries over aerospace and defense and, specifically, defense technology consulting, ManTech offers exposure to a growth-poised nook of the U.S. defense budget. Its stock is likely to grow faster than those of better-known peers, such as

Northrop Grumman

(NOC) - Get Report

. We rate ManTech "buy."

-- Reported by Jake Lynch in Boston.