Amentum Holdings, Inc. (AMTM): A Bull Case Theory

We came across a bullish thesis on Amentum Holdings, Inc. on R. Dennis’s Substack by OppCost. In this article, we will summarize the bulls’ thesis on AMTM. Amentum Holdings, Inc.'s share was trading at $28.63 as of November 28th. AMTM’s trailing and forward P/E were 106.04 and 12.03 respectively according to Yahoo Finance.

Amentum Holdings, Inc. provides engineering and technology solutions to the US and allied government agencies. AMTM has emerged as a leading pure-play government technology contractor following the Reverse Morris Trust transaction with Jacobs Solutions in September 2024, combining legacy Amentum operations with Jacobs’ Critical Mission Solutions and Cyber & Intelligence units.

The merger created a scaled entity with pro forma revenues near $14 billion, a backlog exceeding $44.6 billion, and over 53,000 employees across 80 countries, positioning Amentum to compete directly with Tier 1 incumbents like Leidos, SAIC, and Booz Allen Hamilton.

The company’s portfolio now includes a high-margin Digital Solutions segment and a steady-state Global Engineering Solutions business, allowing it to offer end-to-end capabilities from system design to operations, a structure highly attractive to the Department of Defense and federal agencies seeking single prime contractors.

Despite its scale, the market currently undervalues Amentum, pricing it at a forward P/E of 10.4x, reflecting typical “conglomerate discount” and integration concerns. Key value drivers include $50–$70 million in cost synergies, aggressive debt paydown, and expansion of the Digital Solutions segment, which already demonstrates 8% EBITDA margins and robust underlying growth.

The company’s cash-light model and minimal capital expenditure requirements yield an Owner Earnings yield of 10.8%, underscoring its strong free cash flow generation and deleveraging potential. Recent wins, including a $946 million U.S. Army contract and $350 million in digital task orders, validate the merger’s strategic rationale.

With net leverage improving to 3.5x and a strong pipeline, Amentum offers a compelling risk/reward profile. Even modest execution supports a mid-$30s valuation, while successful growth and market re-rating of Digital Solutions could push the stock toward $42, nearly doubling current levels. The combination of stable revenue, high free cash flow, and operational scale makes Amentum a uniquely attractive investment in government technology.

Previously we covered a bullish thesis on Amentum Holdings, Inc. (AMTM) by Acid Investments in March 2025, which highlighted post-spin portfolio diversification, strong backlog coverage, and management’s focus on margin expansion and deleveraging. The company's stock price has appreciated approximately by 53.34% since our coverage. This is because the thesis played out. OppCost shares a similar perspective but emphasizes the Reverse Morris Trust merger, Digital Solutions growth, and free cash flow potential.

Amentum Holdings, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 32 hedge fund portfolios held AMTM at the end of the second quarter which was 37 in the previous quarter. While we acknowledge the potential of AMTM as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.