Company Overview
Frequency Electronics, Inc. is a specialized manufacturer dedicated to the design, development, manufacture, marketing, and sale of precision time and frequency control products and components specifically for microwave integrated circuit applications. The company operates within the Technology sector, focusing on the Communication Equipment industry, which places it at the intersection of critical infrastructure and high-precision engineering solutions. This entity maintains a workforce of 216 employees and holds a current market capitalization of $462.37M, with annual revenue generated over the trailing twelve months totaling $67.81M. These valuation and revenue figures indicate that the company operates as a mid-cap entity with a focused revenue stream, suggesting a niche market position rather than broad diversification across the wider technology landscape.
Financial Health
The company reported revenue of $67.81M for the trailing twelve months, generating a net income of $7.20M and an EBITDA of $8.63M. The gap between the revenue figure and the net income reveals a cost structure where operating expenses, including taxes and interest, reduced the pre-tax earnings by $1.43M, while the EBITDA figure remains higher due to the exclusion of depreciation and amortization. However, the free cash flow stands at -$7,091,000, which indicates a negative cash generation capability from operations relative to capital expenditures or working capital changes, potentially limiting immediate financial flexibility for large-scale internal expansion. Analyzing the profitability metrics, the gross margin sits at 38.0%, reflecting the production efficiency of its microwave components before overhead costs. The operating margin is reported as -13.0%, suggesting that general and administrative expenses currently exceed operating income, while the profit margin of 10.6% demonstrates the final profitability after all expenses including interest and taxes. Regarding balance sheet strength, the available data lists cash and debt as N/A, and the debt-to-equity ratio is also N/A, which implies that specific leverage details are not disclosed in the current reporting period. Despite the lack of explicit debt figures, the current ratio of 2.60 indicates a strong short-term liquidity position, as current assets are more than double the current liabilities, ensuring the ability to meet short-term obligations. Furthermore, the Return on Equity is 12.8% and the Return on Assets is 4.6%, metrics that reveal management is effectively utilizing shareholder equity to generate returns, although the asset return is lower, which is typical for capital-intensive sectors, yet still positive.
Valuation Assessment
The trailing twelve-month P/E ratio is 64.36, while the forward P/E is 41.39. The significant difference between these two multiples implies that the market expects a substantial increase in future earnings relative to current levels, driving the forward multiple down from the trailing historical average. The price-to-book ratio is 7.67, which indicates that the stock trades at a substantial premium over its book value, suggesting investors are pricing in high growth potential or intangible assets not fully captured on the balance sheet. Alternative valuation metrics include a price-to-sales ratio of 6.82 and an EV/EBITDA of N/A, where the high P/S multiple suggests the market values the company based on its sales growth potential despite the lack of an EV/EBITDA figure. In terms of price volatility, the 52-week high is $61.47 and the 52-week low is $14.41, meaning the current price sits well above the bottom of the trading range but has experienced significant fluctuation over the past year. The beta value is 0.31, which indicates that the stock exhibits low volatility relative to the broader market, moving with significantly less intensity than the overall index.
Growth & Income
The revenue growth year-over-year is 0.0%, while the earnings growth year-over-year is N/A. The absence of earnings growth data combined with flat revenue growth suggests the company is currently stabilizing its top line rather than experiencing rapid expansion, and without specific earnings growth figures, one cannot definitively state if earnings are growing faster or slower than revenue. Regarding income distributions, the dividend yield is N/A and the payout ratio is 0.0%, indicating that the company does not distribute dividends to shareholders. Instead of paying out cash, the company reinvests its earnings back into the business operations or retains them to bolster the balance sheet. The overall growth and income profile for Frequency Electronics, Inc. is characterized by flat revenue growth, no dividend payouts, and a reliance on retained earnings and operational efficiency rather than capital distribution or rapid top-line expansion.