Brinks' Q4 2025 Shows Accelerating AMS/DRS Growth and Leverage Reduction, Yet Valuation Remains Stretched

What happened

Brinks announced its fourth-quarter and full-year 2025 results, reporting 9% revenue growth with 5% organic growth. The AMS/DRS segment accelerated to 22% organic growth, indicating strong execution in its tech-enabled offerings and addressing a key watch item from prior analysis. Record cash generation included $640 million from operations and $436 million in free cash flow, allowing net debt leverage to drop to 2.7x Adjusted EBITDA from 3.6x previously. Despite these operational improvements, the stock trades at elevated multiples (~29x P/E and ~9.8x EV/EBITDA), well above a conservative DCF anchor of ~$62 per share, and legal overhangs like DOJ/FinCEN investigations persist. While deleveraging and cash flow strength are positive, the core risks of declining cash usage and high valuation continue to limit the margin of safety for investors.

Implication

The improved leverage to 2.7x addresses a key concern from the DeepValue report, reducing downside risk if sustained through consistent free cash flow generation. Accelerating AMS/DRS growth supports the transformation narrative, potentially justifying a higher multiple if margins expand and it offsets secular declines in cash usage. However, with the stock up 33% over 12 months and trading well above conservative DCF estimates, much of this optimism may already be priced in, embedding a bullish view that leaves little room for error. Legal and regulatory issues, such as DOJ/FinCEN investigations, along with ongoing cash volume headwinds, continue to pose material risks that could undermine future cash flows and investor confidence. Therefore, while existing holders might see this as validation, new investors should wait for a more attractive entry point or clearer resolution of overhangs before considering a position.

Thesis delta

The DeepValue thesis of 'POTENTIAL SELL' was based on high leverage and valuation; the news of reduced leverage to 2.7x and strong free cash flow mitigates some balance sheet concerns, making the thesis slightly less negative. However, with valuation still stretched at ~29x P/E and legal risks unchanged, the overall stance remains cautious, shifting towards a less urgent sell but not yet a buy. A sustained improvement in AMS/DRS growth and further deleveraging could eventually support a more neutral stance, but investors should monitor these trends closely.