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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:75Outperform
Price Target:
$16.00
▲(17.99% Upside)
Action:ReiteratedDate:02/25/26
The score is driven primarily by strong financial quality (high margins and a very low-debt balance sheet) and supportive technical momentum. These positives are tempered by a relatively expensive valuation (P/E ~36) and earnings visibility risks from lumpy, approval- and budget-dependent defense program timing alongside recent margin and cost pressures.
Positive Factors
Conservative balance sheet
The company maintains virtually no leverage (debt-to-equity ~0.013) and growing equity, which provides durable financial flexibility. This conservatism supports funding product development, opportunistic M&A and buffer against delayed defense payments without risking solvency over the next 2–6 months.
High and sustainable product margins
Consistently strong gross margins (mid-60s) and a healthy net margin reflect differentiated hardware/software offerings with pricing power. These margin levels underpin cash generation and reinvestment capacity, making profitability less reliant on volatile volume swings over the medium term.
Strengthened product and defense positioning
Recent tech milestones (Nanogen launch, DAVID hardening) plus the Precision Acoustics acquisition expand capabilities and addressable markets in defense and commercial subsea. This broadens contractual opportunities and supports a strategic shift toward multi‑year, program‑based recurring sales.
Negative Factors
Defense timing and approval risk
A meaningful portion of near‑term revenue depends on defense contract awards and NAVY ANU approval for DAVID. Government budget timing and approvals are outside management control, creating lumpy, back‑loaded revenues and low visibility over the next several quarters.
Margin dilution from lower‑margin mix
The acquisition and higher contribution from acoustic sensors materially reduced consolidated margins. If lower‑margin product lines or underutilized rental assets persist, structural margin pressure could erode profitability even if revenue grows, limiting long‑term cash flow upside.
Uneven cash flow and rising operating costs
While FCF recovered in the latest year, cash conversion has been inconsistent historically and operating expenses rose sharply (acquisition costs, earn‑outs, FX). Persistent volatility in cash flow plus higher operating spend could strain runway if contract timing slips.
Coda Octopus Group (CODA) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$157.79M
Dividend YieldN/A
Average Volume (3M)42.91K
Price to Earnings (P/E)38.3
Beta (1Y)0.60
Revenue Growth29.34%
EPS Growth13.81%
CountryUS
Employees103
SectorIndustrials
Sector Strength72
IndustryAerospace & Defense
Share Statistics
EPS (TTM)0.09
Shares Outstanding11,270,575
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 Cap0.82
Enterprise Value/Revenue4.88
Enterprise Value/Gross Profit7.34
Enterprise Value/Ebitda18.79
Forecast
1Y Price Target
$14.00Price Target Upside3.24% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
EPS Forecast (FY)0.47
Revenue Forecast (FY)$29.27M
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 Group makes money through the sale of its proprietary 3D sonar technology and underwater solutions primarily to the marine, oil and gas, and defense industries. The company's key revenue streams include product sales, engineering services, and software licenses. Additionally, CODA benefits from strategic partnerships with defense contractors and maritime companies, which help expand its market reach and drive sales. The company also engages in research and development to continually innovate and expand its product offerings, ensuring a steady demand for its cutting-edge technology solutions.
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:Mar 18, 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 supported by solid profitability (gross margin ~66% and net margin ~15.5%) and an exceptionally conservative balance sheet (minimal leverage, growing equity, strong cash position). The main offset is uneven cash-flow consistency across years despite a clear latest-year rebound in operating and free cash flow.Income Statement
Profitability is solid, with consistently strong gross margins (~64%–70%) and healthy operating and net margins (latest net margin ~15.5%). Revenue growth accelerated in the latest year (2025: ~9.1% vs. 2024: ~0.05%) after a dip in 2023, but margins are below the 2021–2022 peak levels, indicating some recent normalization in earnings power.78
Positive
Balance Sheet
The balance sheet is very conservatively financed: debt remains minimal (latest debt-to-equity ~0.013; several years at or near zero debt), and equity has steadily grown over time. Returns on equity are positive and fairly stable (~6%–12%), though not high enough to be considered best-in-class, suggesting the company prioritizes stability over aggressive leverage-driven returns.92
Very Positive
Cash Flow
Cash generation improved meaningfully in the latest year: operating cash flow rose to ~$7.2M and free cash flow to ~$6.0M (2025), with positive free-cash-flow growth. Cash conversion is generally reasonable (latest free cash flow about ~84% of net income), but the track record is uneven—most notably weak free cash flow in 2023—highlighting some volatility in year-to-year cash realization.74
Positive
| Breakdown | Oct 2025 | Oct 2024 | Oct 2023 | Oct 2022 | Oct 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 26.56M | 20.32M | 19.35M | 22.23M | 21.33M |
| Gross Profit | 17.66M | 14.17M | 13.03M | 15.19M | 14.77M |
| EBITDA | 6.90M | 4.44M | 4.09M | 5.88M | 6.20M |
| Net Income | 4.13M | 3.65M | 3.12M | 4.30M | 4.95M |
Balance Sheet | |||||
| Total Assets | 64.49M | 57.54M | 51.84M | 46.93M | 45.47M |
| Cash, Cash Equivalents and Short-Term Investments | 28.68M | 22.48M | 24.45M | 22.93M | 17.75M |
| Total Debt | 394.93K | 413.17K | 0.00 | 0.00 | 63.56K |
| Total Liabilities | 6.38M | 4.42M | 3.41M | 3.54M | 4.42M |
| Stockholders Equity | 58.12M | 53.13M | 48.43M | 43.38M | 41.05M |
Cash Flow | |||||
| Free Cash Flow | 6.04M | 1.86M | 259.54K | 6.17M | 2.31M |
| Operating Cash Flow | 7.21M | 2.45M | 2.39M | 6.73M | 3.27M |
| Investing Cash Flow | -1.20M | -4.42M | -1.52M | -556.56K | -964.20K |
| Financing Cash Flow | 0.00 | -15.63K | -17.96K | -91.90K | 139.32K |
Coda Octopus Group Technical Analysis
Positive
13.56
Price Trends
11.15
Positive
10.08
Positive
8.89
Positive
Market Momentum
0.92
Negative
57.96
Neutral
68.10
Neutral
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 13.56 is above the 20-day moving average (MA) of 12.69, above the 50-day MA of 11.15, and above the 200-day MA of 8.89, indicating a bullish trend. The MACD of 0.92 indicates Negative momentum. The RSI at 57.96 is Neutral, neither overbought nor oversold. The STOCH value of 68.10 is Neutral, 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 |
|---|---|---|---|---|---|---|---|
75 Outperform | $157.79M | 38.29 | 6.23% | ― | 29.34% | 13.81% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
60 Neutral | $94.90M | 20.81 | 20.43% | ― | 21.60% | 35.00% | |
55 Neutral | $48.93M | -84.90 | -1.26% | ― | -23.87% | -109.71% | |
50 Neutral | $88.95M | -3.22 | ― | ― | ― | ― | |
39 Underperform | $115.56M | -7.04 | -193.70% | ― | ― | ― |
* Industrials Sector Average
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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.