VERRA MOBILITY CORPORATION (VRRM): what the price requires
The current priced-in claim for VERRA MOBILITY CORPORATION (VRRM) is temporarily suppressed because the live engine record is unavailable. The dated report remains a snapshot, not a current market read.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/VRRM
Headline
| Field | Value |
|---|---|
| Ticker | VRRM |
| Company | VERRA MOBILITY CORPORATION |
| Current price | $4.52/sh |
| Composition | Service revenue 94% / Product sales 6% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 56.1% |
| Operating margin today | 193.7% |
| Margin compression implied | -137.6pp |
| Multiple paid | 7x operating income |
The operating-margin requirement is derived from the framework's value band at year 10, a separately labeled basis from the headline growth/duration solve.
The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.
Solve inputs: computed at a 7.5% cost of capital with 4% terminal growth over a 5-year stage.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.73σ |
| cohort percentile (of 210 peers) | 7 |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 0.49x | 5 | justifies |
| Earnings | 0.45x | 4 | justifies |
| Relative | 0.30x | 5 | justifies |
| Growth | 0.78x | 2 | justifies |
Families that justify the price: Asset, Earnings, Relative, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 4.1%); the inversion above states its own rate.
Per-Model Detail (n=16)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | — | — | no | — |
| DCF Exit Multiple | Growth | $10.90 | 0.41x | yes | Exit EV/EBITDA: 4.8x / 6.8x / 8.8x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $14.18 | 0.32x | yes | P/E 14.12x (blended: static sector reference 20x + trailing (TTM) 5x), scenarios: 11.8x / 14.1x / 16.5x (bear / base = reference held flat / bull), EV/EBITDA 13x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $9.22 | 0.49x | yes | BV/sh $1.77, ROE (TTM) 48.2%, ke 9.3% |
| Two-Stage Excess Return | Asset | $25.20 | 0.18x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $3.94 | 1.15x | yes | Rev $1.0B, growth 10% (input: historical growth; tapered), Terminal P/S: 0.6x / 0.7x / 0.8x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $28.70 | 0.16x | yes | EPS $0.82, growth 35% (input: historical EPS growth), PEG=0.15 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $11.73 | 0.39x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.18B × (1−34%) / WACC 4.1% → EPV (no growth) |
| Residual Income | Asset | $14.87 | 0.30x | yes | BV $1.77 + 5yr PV of (ROE (TTM) 48.2% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $5.71 | 0.79x | yes | √(22.5 × EPS $0.82 × BVPS $1.77) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $15.08 | 0.30x | yes | EBITDA $0.26B × sector EV/EBITDA 13.0x |
| FCF Yield | Earnings | $0.27 | 16.74x | yes | FCF $104.6M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $0.01 | 452.00x | yes | SBC-adj FCF $0.08B (FCF $0.10B − SBC $0.03B) capitalized at Kₑ (excluded from median) |
| Ben Graham Formula | Earnings | $26.46 | 0.17x | yes | EPS $0.82 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $1.09 | 4.15x | yes | BV $1.77 × (ROIC 2.5% / WACC 4.1%) |
| P/Sales Sector | Relative | $9.56 | 0.47x | yes | Revenue $0.98B × sector P/S 1.5x |
| PEG Fair Value | Relative | $30.75 | 0.15x | yes | EPS $0.82 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $8.86 | 0.51x | yes | EPS $0.82 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $1.0b |
| Net debt / NOPAT (after-tax) | 6.14x |
| Net debt / operating income (pre-tax) | 4.06x |
| Interest coverage | 3.8x |
| Share count CAGR (buyback) | -1.1% |
| Burning cash | no |
Bullet Takeaways
- Verra Mobility runs smart-mobility services: automated traffic enforcement cameras for governments, plus commercial-fleet tolling and violations management for rental-car companies. Service revenue is about 94% of the business. The stock has collapsed in 2026 after a major customer loss.
- The shock was Avis terminating its contract, effective September 2026, which the company estimates will cut annualized commercial-services revenue by $135 million to $145 million and segment profit by $120 million to $125 million. Full-year 2026 revenue guidance was cut to $985 million to $995 million, and the CEO has stepped down.
- The price now reflects the damage and then some. At $4.45 the market pays about seven times operating income, below what even a steady decline in operating profit would warrant, and beneath where most valuation methods land. The question is whether the recurring government enforcement business stabilizes the company after the rental-car blow.
Bull Case
Start with the biggest fear, because it is the only honest way to open this one: Avis is leaving, and the market has treated it as close to fatal, knocking the stock down roughly 70% in a week. So the question is not whether the news is bad, it plainly is, but whether the punishment has overshot what the remaining business is worth. The data suggest it may have. Even after the cut, full-year 2026 revenue is guided to $985 million to $995 million, the company still generated $26.7 million of net income and $40.8 million of operating cash flow in the first quarter, and it ran a 23.8% operating margin on the trailing base. A business throwing off cash at that scale, trading at about seven times operating income, is being priced as if the decline will keep going well past the Avis hit.
The reason it might not is the part of Verra that Avis does not touch. The government enforcement business, automated speed and red-light camera programs run for cities and states, is a recurring, contract-based franchise with high switching costs and long renewal cycles, and it is entirely separate from the rental-car commercial-services segment that lost Avis. Municipal enforcement programs do not churn the way a single corporate account does; once a city standardizes on a vendor's cameras, back office and citation processing, replacing it is a procurement ordeal. That segment provides a recurring revenue spine that survives the Avis departure intact.
The valuation gap is the crux of the bull case. The stock fell so hard that even the price targets analysts slashed to the single digits, UBS and Morgan Stanley to $4, Deutsche to $9, Koning to $8, mostly sit at or above where it trades. For an investor willing to underwrite a stabilized, post-Avis Verra centered on its sticky government business, the bull case is that the price already assumes a worse outcome than the recurring core is likely to deliver.
Bear Case
The balance sheet is what turns a bad quarter into a structural problem, and Verra's is leveraged into a shrinking earnings base. Net debt is about $1.0 billion against trailing operating income of roughly $233 million, so net debt sits north of four times operating income, with interest covered only about 3.7 times. That leverage was manageable when the Avis-inclusive earnings stream was intact. Now the company is losing $120 million to $125 million of annualized segment profit, which both shrinks the denominator that services the debt and tightens the coverage ratio at the same time. Debt is unforgiving: it does not adjust when a customer walks, and a levered company that just lost a major profit stream has far less margin for the next surprise.
The Avis loss also raises a moat question the bulls would rather not confront. Verra's commercial-services business was sold as a sticky, hard-to-displace franchise embedded in rental-car operations, and the loss of an anchor customer of that size undercuts the durability story across the whole segment. If the largest, most sophisticated rental-car operators can and do switch, the switching costs were lower than the narrative claimed, and the remaining commercial accounts may be more contestable than assumed. One analyst explicitly framed the event as weakening Verra's commercial-services moat, and there is reported legal scrutiny around the situation, which adds uncertainty and potential cost.
Leadership and execution risk sit on top of all of it. The CEO stepped down on June 1, 2026, with an interim chief executive now running the company through its worst stretch as a public company, exactly when steady hands and a clear plan matter most. A levered business absorbing a nine-figure profit loss, navigating analyst downgrades that took price targets from the twenties into the single digits, and doing it under interim leadership, is a company where a lot can still go wrong. The seven-times multiple is cheap, but cheap reflects real, permanent impairment to earnings, not a temporary dislocation, and a value buyer here is betting that the bleeding stops at Avis rather than spreading to the rest of the commercial book.
Valuation
The valuation has to be read through the lens of a business that just lost a major customer, because the price is the market's verdict on the damage. At $4.45 (June 28, 2026) the stock trades at about seven times company-wide operating income, a multiple so low that it functions as a bound: the price sits below what even a 5%-a-year decline in operating profit would warrant. On the methods, the stock looks deeply discounted.
The catch is that the methods are partly reading a pre-cut earnings base. The Avis termination removes $135 million to $145 million of annualized revenue and $120 million to $125 million of segment profit, effective September 2026, so the forward operating income the multiple should be measured against is materially lower than the trailing figure, and the guidance cut to $985 million to $995 million reflects that.
The honest synthesis is that this is a distressed-value situation, not a clean bargain. Even adjusting for the lost profit, a recurring-revenue enforcement business at a single-digit operating-income multiple is inexpensive, and the analyst price targets, slashed to roughly $4 to $9, now bracket the current price, suggesting the worst of the repricing may be in. But the leverage, the moat question the Avis loss raises, and the interim-leadership overhang are real risks that justify some of the discount. The conclusion is that the price embeds a pessimistic outcome; the return depends on the government enforcement core stabilizing the company and on no further erosion in the remaining commercial accounts, against a balance sheet with less room than it had a year ago.
Catalysts
The dominant catalyst is already in motion and negative: Avis terminated its contract effective September 2026, cutting annualized commercial-services revenue by $135 million to $145 million and segment profit by $120 million to $125 million, prompting a guidance cut to $985 million to $995 million for the year. The key forward checkpoints are how cleanly the company absorbs that loss, whether any cost actions offset it, and critically, whether any other large commercial accounts follow, since contagion in the rental-car book would be the next leg down.
Leadership and governance are an active swing factor. CEO David Roberts stepped down and Jon Keyser took over as interim chief executive on June 1, 2026, so the appointment of a permanent CEO and the strategy that leader sets out are catalysts. The reported legal scrutiny around the Avis situation is an additional uncertainty to monitor.
The stabilizing thread is the recurring government enforcement business and the balance sheet. Q1 2026 showed revenue of $223.6 million, net income of $26.7 million, and $40.8 million of operating cash flow, and the company reaffirmed guidance before the later cut, so quarterly cash generation and the trajectory of the enforcement segment are the signals that the core is holding. With net debt near $1.0 billion, debt reduction and any change to capital allocation matter. Analyst sentiment has reset sharply lower, with downgrades from UBS, Morgan Stanley, Deutsche Bank and others and price targets cut into the $4 to $9 range, so stabilization of fundamentals is what would be needed to turn that tide.
Peer Cohorts (Per Segment, With Filing Citations)
Core business (reported)
- ABG (ASBURY AUTOMOTIVE GROUP, INC.)
- (no filing in the citation store)
- ADNT (Adient plc)
- (no filing in the citation store)
- AEO (American Eagle Outfitters, Inc.)
- (no filing in the citation store)
- ALV (AUTOLIV, INC.)
- (no filing in the citation store)
- AMZN (AMAZON COM INC)
- (no filing in the citation store)
- AN (AUTONATION, INC.)
- (no filing in the citation store)
- ANF (Abercrombie & Fitch Co.)
- (no filing in the citation store)
- APTV (APTIV PLC)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.