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Coda Octopus Group Inc (CODA)
NASDAQ:CODA
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Coda Octopus Group
(NASDAQ:CODA)
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Rating:73Outperform
Price Target:
$14.50
▲(14.35% Upside)
Action:ReiteratedDate:03/19/26
The score is driven primarily by strong financial resilience (very low leverage, solid margins, and strong cash generation) and a generally positive earnings-call trajectory (growth, product milestones, and defense mix shift). These positives are tempered by mixed near-term technical signals (below the 20-day average) and a relatively high P/E with no dividend yield provided, alongside execution/timing risks highlighted on the call.
Positive Factors
Conservative Balance Sheet
Extremely low leverage and a sizeable equity base create durable financial flexibility. The debt-free posture and cash buffer reduce insolvency risk, allow the company to fund M&A or absorb lumpy defense contract timing, and support multi‑year investment without external financing.
Strong Cash Generation
High cash conversion (OCF > reported earnings) and positive free cash flow provide durable funding for capex, working capital and acquisitions. Reliable FCF improves earnings quality, supports reinvestment into product development and cushions the business through project timing volatility.
Product & Defense Positioning
Acquisition-driven capability expansion plus new products (Nanogen, hardened DAVID with initial deliveries) broaden technology offerings and increase defense relevance. This strengthens the firm’s position for multi‑year, program-based contracts and supports more predictable recurring revenue streams over time.
Negative Factors
Margin Compression
The addition of lower‑margin businesses and a change in sales mix have compressed consolidated margins. If this mix persists, operating leverage and sustainable profitability could be structurally lower than prior peak cycles, limiting margin recovery despite revenue growth.
Revenue & Cash-Flow Volatility
Historical uneven revenue and cash flow, combined with DAVID’s dependency on ANU approval and defense budget timing, make revenue realization lumpy. Back‑loaded contract deliveries and procurement uncertainty raise forecasting and working‑capital risks over the medium term.
Rising Operating Costs
Higher fixed operating costs from acquisition-related expenses, earn-outs and FX reduce operational leverage. With rental assets underutilized and revenue lumpy, elevated SG&A weakens margin resilience and necessitates either higher sustained revenue or cost containment to restore prior profitability levels.
Coda Octopus Group (CODA) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$142.98M
Dividend YieldN/A
Average Volume (3M)42.91K
Price to Earnings (P/E)32.2
Beta (1Y)0.56
Revenue Growth29.34%
EPS Growth13.81%
CountryUS
Employees103
SectorIndustrials
Sector Strength72
IndustryAerospace & Defense
Share Statistics
EPS (TTM)0.08
Shares Outstanding11,276,152
10 Day Avg. Volume47,056
30 Day Avg. Volume42,912
Financial Highlights & Ratios
PEG Ratio2.30
Price to Book (P/B)1.98
Price to Sales (P/S)4.33
P/FCF Ratio19.06
Enterprise Value/Market Cap0.79
Enterprise Value/Revenue4.02
Enterprise Value/Gross Profit6.07
Enterprise Value/Ebitda15.49
Forecast
1Y Price Target
$14.00Price Target Upside10.41% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
EPS Forecast (FY)0.51
Revenue Forecast (FY)$30.32M
Coda Octopus Group Business Overview & Revenue Model
Company DescriptionCoda Octopus Group, Inc., together with its subsidiaries, develops and sells underwater technologies and equipment for 3D imaging, mapping, defense, and survey applications in the Americas, Europe, Australia, Asia, the Middle East, and Africa. The company operates through two segments, Marine Engineering Business and Marine Technology Business. It sells technology solutions to the subsea and underwater markets. The company's solutions include geophysical systems, a geophysical data acquisition systems, processing, and analysis software that are used primarily by survey companies, offshore renewable companies, research institutions, and salvage companies; GNSS-aided navigation systems; Echoscope and Echoscope PIPE used for real time monitoring of cable installations for offshore wind projects; and diver augmented vision display system. It offers CodaOctopus GeoSurvey products, such as hardware and software solutions for field acquisition of sidescan sonar and sub-bottom profiler; and CodaOctopus DA4G productivity suite of software that automates the tasks of analyzing, annotating, and mosaicing complex data sets. It markets its products under the CodaOctopus brand name. Coda Octopus Group, Inc. was founded in 1994 and is headquartered in Orlando, Florida.
How the Company Makes MoneyCoda Octopus makes money primarily by selling marine technology products and solutions used in subsea survey and imaging workflows. Key revenue streams include: (1) Product sales of its sonar imaging systems (notably real-time 3D imaging sonar) and associated equipment sold to commercial and defense/government customers; (2) Software revenue tied to the company’s visualization, processing, and mapping applications that integrate with its sonar and/or third-party sensors, typically sold as licenses and/or bundled with hardware solutions; and (3) Services and support revenue, which can include installation/commissioning, training, maintenance, and ongoing technical support associated with deployed systems. Revenue is driven by customer demand for higher-fidelity underwater imaging and operational safety/efficiency in subsea work, as well as procurement cycles in defense and government markets. Specific partnership details contributing to earnings: null.
Coda Octopus Group Key Performance Indicators (KPIs)
Coda Octopus Group Earnings Call Summary
Earnings Call Date:Jan 29, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Jun 17, 2026
Earnings Call Sentiment Positive
The call reflects a positive operational and strategic trajectory: strong top-line growth (+30.7% revenue), improved absolute profitability (higher gross profit, operating income, and EPS), successful M&A integration, product launches (Nanogen) and completion of the DAVID hardening program with initial deliveries. Near-term challenges remain, including margin compression from a lower-margin acquisition and underutilized rental assets, increased operating costs, and timing uncertainty tied to defense budgets and product approvals (ANU). Overall the company appears to be transitioning toward higher-defense-content, program-based revenue with a solid cash position to pursue further M&A, but execution and timing of defense contracts and approvals will determine near-term revenue cadence.Q4-2025 Updates
Positive Updates
Strong Consolidated Revenue Growth
Total revenue of $26.6M in FY2025 vs $20.3M in FY2024, an increase of 30.7%.
Improved Profitability and EPS
Net income of $4.1M (diluted EPS $0.37) vs $3.6M ($0.32) in FY2024 — net income increased ~13.9% and EPS increased ~15.6%. Operating income rose 26.6% to $4.5M.
Successful Acquisition Contribution
Precision Acoustics Limited added $5.4M of revenue in FY2025, contributing 20.4% of consolidated revenue and ~18% of consolidated gross profit; expanded underwater acoustics capability and positioned the group for larger defense contracts.
Product Launches and Technology Milestones
Launched the Nanogen ultra-compact 3D sonar series (smartphone-sized) and completed the DAVID untethered hardening program; delivered an initial batch of 16 next‑generation untethered DAVID systems for fleet evaluation.
Strong Hardware Sales Growth
Hardware sales increased 30.5% to $9.5M (from $7.2M). Hardware sales to Asia rose ~7.7% to $5.9M (from $5.5M).
Defense Revenue and Strategic Positioning
Marine technology business revenue was $13.2M (+3.2% YoY) with defense representing 46% of core-business revenue (vs 40% prior year), reflecting progress in shifting mix toward defense opportunities.
Cash Position and Debt-Free Balance Sheet
Cash and equivalents of $28.7M (up $6.2M from $22.5M) and no debt, providing capacity for M&A and strategic investments.
Gross Profit Expansion in Absolute Terms
Consolidated gross profit increased to $17.7M from $14.2M in FY2024, reflecting higher revenue and contributions from the new business unit.
Negative Updates
Consolidated Gross Margin Compression
Consolidated gross margin declined to 66.5% in FY2025 from 69.8% in FY2024 (down 3.3 percentage points), driven in part by the lower-margin acoustic sensors and materials business (accounting for ~2 percentage points of the decline) and a change in sales mix.
Marine Technology Margin and Rental Underutilization
Marine technology gross margin fell to 74.5% from 77.9% (down 3.4 percentage points). Rental units and associated higher-margin rental services were significantly underutilized, with rental sales down 36.6%, hurting gross profit margins — attributed to reduced offshore renewables activity following policy changes.
Rising Operating Expenses
Total operating expenses increased 24% to $13.1M (from $10.6M). SG&A rose 27.9% to $10.7M (from $8.3M), driven by the acquisition (added 22.1% to costs), earn-out provisions, and unfavorable FX translation.
Timing and Budget Uncertainty in Defense Sales
Several defense program awards were delayed in Q4 due to the U.S. government shutdown and continuing resolutions; procurement decisions on key trials/demonstrations are expected in early 2026 but remain subject to internal budget approvals, creating timing risk.
Revenue Uncertainty for DAVID Despite Progress
Although the untethered DAVID completed hardening and 16 units were delivered for evaluation, broader revenue is contingent on U.S. Navy Authorization for Navy Use (ANU) approval and budget appropriations — management notes DAVID revenue will be lumpy and likely back‑loaded to H2 FY2026.
Dilutive Impact of Lower-Margin Business Mix
The addition of the acoustic sensors and materials business reduced consolidated margin metrics (its gross margin was 58.6%) and contributed to margin dilution relative to prior-year mix.
Company Guidance
Management's guidance centers on near‑term defense program decisions in early 2026 with initial deliveries expected in FY2026 (subject to contract awards) and the Nanogen series and DAVID untethered system serving as the primary catalysts—DAVID’s ANU approval is expected around Q2 with revenues back‑weighted to Q3–Q4, and management expects DAVID to exceed FY2025’s $3.7 million (though they gave no firm FY2026 target and cautioned revenues will be lumpy). They also plan to pivot the marine business toward multi‑year, program‑based recurring sales, pursue M&A (seeking another acquisition in FY2026) funded from $28.7 million cash and no debt, and convert successful trials into production contracts; for context FY2025 totals were $26.6M revenue (+30.7% YoY), marine tech $13.2M (Echoscope 71.9% / DAVID 28.1% of marine revenue), acoustic sensors 20.4% of consolidated revenue, defense engineering $7.9M, gross profit $17.7M (66.5% margin), operating income $4.5M (17.1% margin), and net income $4.1M ($0.37 diluted EPS).Coda Octopus Group Financial Statement Overview
Summary
Strong overall fundamentals led by an exceptionally conservative balance sheet (very low leverage) and solid profitability (TTM ~66% gross margin, ~14.8% net margin). Operating and free cash flow are strong and exceed net income, supporting earnings quality, but multi-year revenue and cash-flow patterns have been uneven with periodic volatility and margins below prior-cycle highs.Income Statement
TTM (Trailing-Twelve-Months) revenue rose 5.6% with strong profitability: ~66% gross margin and ~14.8% net margin, alongside solid operating margin (~20.9%). However, margins are below the stronger levels seen in 2021–2022 (when net margin and operating margin were higher), and growth has been uneven over the cycle (including a revenue decline in 2023), suggesting some end-market or project timing volatility.78
Positive
Balance Sheet
The balance sheet is very conservatively financed, with extremely low leverage (TTM debt-to-equity ~0.007) and a large equity base (~$60.2M) relative to debt (~$0.4M). Returns on equity are steady around ~7% TTM/2025, but remain well below the 2021–2022 peak levels, implying profitability on the equity base has moderated even as financial risk remains minimal.92
Very Positive
Cash Flow
Cash generation is strong in TTM (Trailing-Twelve-Months), with operating cash flow of ~$8.0M and free cash flow of ~$6.9M, up ~14.6%. Cash flow is also higher than reported earnings (operating cash flow about 1.7x net income), supporting earnings quality. The key weakness is volatility: free cash flow was very weak in 2023 and operating cash flow coverage fell below 1x in 2023–2024, indicating periodic working-capital swings or lumpiness in collections/spending.80
Positive
| Breakdown | TTM | Oct 2025 | Oct 2024 | Oct 2023 | Oct 2022 | Oct 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 28.06M | 26.56M | 20.32M | 19.35M | 22.23M | 21.33M |
| Gross Profit | 18.60M | 17.66M | 14.17M | 13.03M | 15.19M | 14.77M |
| EBITDA | 7.28M | 6.90M | 4.44M | 4.09M | 5.88M | 6.20M |
| Net Income | 4.15M | 4.13M | 3.65M | 3.12M | 4.30M | 4.95M |
Balance Sheet | ||||||
| Total Assets | 65.62M | 64.49M | 57.54M | 51.84M | 46.93M | 45.47M |
| Cash, Cash Equivalents and Short-Term Investments | 30.45M | 28.68M | 22.48M | 24.45M | 22.93M | 17.75M |
| Total Debt | 402.33K | 394.93K | 413.17K | 0.00 | 0.00 | 63.56K |
| Total Liabilities | 5.44M | 6.38M | 4.42M | 3.41M | 3.54M | 4.42M |
| Stockholders Equity | 60.19M | 58.12M | 53.13M | 48.43M | 43.38M | 41.05M |
Cash Flow | ||||||
| Free Cash Flow | 6.91M | 6.04M | 1.86M | 259.54K | 6.17M | 2.31M |
| Operating Cash Flow | 8.05M | 7.21M | 2.45M | 2.39M | 6.73M | 3.27M |
| Investing Cash Flow | -1.17M | -1.20M | -4.42M | -1.52M | -556.56K | -964.20K |
| Financing Cash Flow | 0.00 | 0.00 | -15.63K | -17.96K | -91.90K | 139.32K |
Coda Octopus Group Technical Analysis
Positive
12.68
Price Trends
12.48
Positive
10.76
Positive
9.38
Positive
Market Momentum
0.27
Positive
44.49
Neutral
11.54
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CODA, the sentiment is Positive. The current price of 12.68 is below the 20-day moving average (MA) of 14.11, above the 50-day MA of 12.48, and above the 200-day MA of 9.38, indicating a neutral trend. The MACD of 0.27 indicates Positive momentum. The RSI at 44.49 is Neutral, neither overbought nor oversold. The STOCH value of 11.54 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CODA.
Coda Octopus Group Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $142.98M | 32.24 | 6.23% | ― | 29.34% | 13.81% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
55 Neutral | $49.27M | -38.14 | -1.25% | ― | -23.87% | -109.71% | |
50 Neutral | $88.73M | 101.30 | 19.39% | ― | 21.60% | 35.00% | |
50 Neutral | $78.77M | -2.61 | -356.97% | ― | ― | ― | |
39 Underperform | $102.98M | -5.98 | -280.16% | ― | ― | ― |
* Industrials Sector Average
CODA
Coda Octopus Group
12.68
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88.41%
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VWAV
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HOVR
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1.78
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.