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Esco Technologies Inc (ESE)
NYSE:ESE
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Esco Technologies (ESE) AI Stock Analysis

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ESE

Esco Technologies

(NYSE:ESE)

Rating:69Neutral
Price Target:
$213.00
▲(5.10% Upside)
Esco Technologies demonstrates strong financial performance and positive earnings call insights, which are the most significant factors in the overall score. However, the high P/E ratio and low dividend yield suggest valuation concerns, and the lack of technical analysis data limits a comprehensive market trend assessment.
Positive Factors
Earnings Guidance
ESE beat expectations for the second quarter and increased its guidance for the full fiscal year, driven by improved margins in Aerospace & Defense and USG.
Financial Performance
The company raised its price target to $200 due to strong performance in Aerospace & Defense and USG sectors, along with the successful acquisition of Maritime Solutions.
Negative Factors
Core Segment Performance
ESE's core segments continue to outperform, with the company raising adj EPS guidance twice since the start of the fiscal year.
Leverage Profile
Closing the Maritime Solutions acquisition has improved the company's leverage profile.

Esco Technologies (ESE) vs. SPDR S&P 500 ETF (SPY)

Esco Technologies Business Overview & Revenue Model

Company DescriptionESCO Technologies Inc. produces and supplies engineered products and systems for industrial and commercial markets worldwide. It operates through Aerospace & Defense, Utility Solutions Group, and RF Shielding and Test segments. The Aerospace & Defense segment designs and manufactures filtration products, including hydraulic filter elements and fluid control devices used in commercial aerospace applications; filter mechanisms used in micro-propulsion devices for satellites; and custom designed filters for manned aircraft and submarines. It also designs, develops, and manufactures elastomeric-based signature reduction solutions for U.S. naval vessels; and mission-critical bushings, pins, sleeves, and precision-tolerance machined components for landing gear, rotor heads, engine mounts, flight controls, and actuation systems for the aerospace and defense industries. The Utility Solutions Group segment provides diagnostic testing solutions that enable electric power grid operators to assess the integrity of high-voltage power delivery equipment; and decision support tools for the renewable energy industry, primarily wind and solar. The RF Shielding and Test segment designs and manufactures RF test and secure communication facilities, acoustic test enclosures, RF and magnetically shielded rooms, RF measurement systems, and broadcast and recording studios; and RF absorptive materials and filters, active compensation systems, antennas, antenna masts, turntables, electric and magnetic probes, RF test cells, proprietary measurement software, and other test accessories to perform various tests. It also provides services, such as calibration for antennas and field probes, chamber certification, field surveys, customer training, and various product tests. The company distributes its products through a network of distributors, sales representatives, direct sales teams, and in-house sales personnel. The company was incorporated in 1990 and is based in St. Louis, Missouri.
How the Company Makes MoneyEsco Technologies generates revenue through the sale of its high-tech products and services across various sectors. Key revenue streams include the sale of test and measurement equipment, which is utilized by clients in aerospace and telecommunications industries for product testing and validation. Additionally, the company earns income from its environmental testing solutions that allow clients to ensure compliance with regulatory standards. Utility metering solutions also contribute significantly to its earnings, as they are essential for modern energy management. Esco maintains strategic partnerships with major players in the aerospace and energy sectors, enhancing its market reach and providing access to larger contracts. The company's commitment to research and development ensures a continuous pipeline of innovative products, further solidifying its revenue generation capabilities.

Esco Technologies Earnings Call Summary

Earnings Call Date:Aug 07, 2025
(Q3-2025)
|
% Change Since: |
Next Earnings Date:Nov 13, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong revenue and earnings growth, particularly in the Aerospace & Defense and Test segments, along with successful completion of strategic portfolio transitions. Despite challenges in the Utility Group and some market uncertainties, the overall performance and future outlook remain positive.
Q3-2025 Updates
Positive Updates
Significant Revenue and Earnings Growth
Sales growth was nearly 27% on a reported basis and 11% on an organic basis. Adjusted earnings per share increased by 25% to $1.60 per share.
Aerospace & Defense Segment Success
Aerospace revenue was up almost 20% in the quarter and 15% year-to-date. The segment achieved a 560 basis point increase in margin and ended the period with record backlog.
Record Backlog
Ended Q3 with a backlog of nearly $1.2 billion, a new record for ESCO.
Successful Portfolio Transition
Completion of the Maritime acquisition and VACCO divestiture marked an important step forward in the execution of ESCO's portfolio strategy.
Test Business Growth
The Test business had a strong revenue quarter with 21% growth over the prior year and improved margins by 350 basis points sequentially.
Negative Updates
Utility Group Sales and Margin Challenges
The Utility Group had a flattish quarter from a sales and margin perspective with only 2% sales growth, driven by Doble's shipment timing issues.
Renewables Market Uncertainty
The U.S. renewables market continues to recalibrate, causing some uncertainty and impacting NRG's performance.
Tariff Impacts
The company experienced some tariff impacts, although at the low end of their expected range.
Company Guidance
During the Q3 2025 ESCO Technologies Earnings Conference Call, the company provided optimistic guidance for the remainder of the fiscal year, highlighting several key metrics. ESCO reported a record backlog of nearly $1.2 billion and a robust sales growth of 27% in the quarter, with 11% attributed to organic growth. The Aerospace & Defense segment experienced a 20% increase in revenue for the quarter and 15% year-to-date, driven by strong orders, including over $80 million for Virginia and Columbia Class submarines. The Test business saw a 21% growth in revenue compared to the previous year, with margins improving by 350 basis points sequentially. Despite a relatively flat quarter for the Utility Solutions Group in terms of sales and margins, strong order growth indicates positive future sales momentum. Consequently, ESCO raised its full-year guidance, expecting over 20% adjusted EPS growth compared to the prior year.

Esco Technologies Financial Statement Overview

Summary
Esco Technologies exhibits strong financial health with consistent revenue and profit growth, supported by efficient operations and a solid balance sheet. While the company shows robust profitability and stable leverage, attention to cash flow management is necessary to sustain long-term growth.
Income Statement
85
Very Positive
Esco Technologies demonstrates strong revenue growth with a 3.32% increase in TTM, supported by healthy gross and net profit margins of 40.57% and 10.37%, respectively. The EBIT and EBITDA margins are robust at 14.98% and 18.76%, indicating efficient operational management. The consistent upward trend in revenue and profitability highlights the company's competitive positioning in the industry.
Balance Sheet
78
Positive
The company maintains a solid balance sheet with a manageable debt-to-equity ratio of 0.43, reflecting prudent financial leverage. The return on equity stands at 9.05%, showcasing effective utilization of shareholder funds. The equity ratio of 52.52% indicates a strong equity base, providing financial stability. However, the increase in total debt over the period warrants monitoring.
Cash Flow
72
Positive
Operating cash flow is positive, with a coverage ratio of 0.32, and free cash flow to net income ratio at 0.76, indicating good cash generation relative to earnings. However, the free cash flow growth rate shows a decline of 3.00% in TTM, suggesting potential challenges in cash flow management. Continued focus on improving cash flow efficiency is advisable.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue1.11B1.03B956.03M857.50M715.44M732.91M
Gross Profit449.32M404.02M375.66M332.05M270.39M272.16M
EBITDA207.78M200.54M178.24M159.63M124.97M84.47M
Net Income114.83M101.88M92.55M82.32M63.50M99.41M
Balance Sheet
Total Assets2.53B1.84B1.68B1.65B1.58B1.37B
Cash, Cash Equivalents and Short-Term Investments78.72M65.96M41.87M97.72M56.23M52.56M
Total Debt568.63M179.83M163.53M177.85M216.10M114.43M
Total Liabilities1.20B601.27M552.07M606.30M557.65M411.93M
Stockholders Equity1.33B1.24B1.13B1.05B1.02B961.60M
Cash Flow
Free Cash Flow121.43M91.38M42.12M90.26M87.65M41.15M
Operating Cash Flow160.39M127.54M76.89M135.28M123.14M82.28M
Investing Cash Flow-524.95M-104.64M-52.47M-55.92M-202.44M140.95M
Financing Cash Flow334.52M-773.00K-78.33M-32.12M81.47M-236.22M

Esco Technologies Technical Analysis

Technical Analysis Sentiment
Positive
Last Price202.66
Price Trends
50DMA
193.53
Positive
100DMA
183.48
Positive
200DMA
165.35
Positive
Market Momentum
MACD
3.02
Negative
RSI
62.19
Neutral
STOCH
81.92
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ESE, the sentiment is Positive. The current price of 202.66 is above the 20-day moving average (MA) of 195.40, above the 50-day MA of 193.53, and above the 200-day MA of 165.35, indicating a bullish trend. The MACD of 3.02 indicates Negative momentum. The RSI at 62.19 is Neutral, neither overbought nor oversold. The STOCH value of 81.92 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ESE.

Esco Technologies Risk Analysis

Esco Technologies disclosed 17 risk factors in its most recent earnings report. Esco Technologies reported the most risks in the "Production" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Esco Technologies Peers Comparison

Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
80
Outperform
$6.39B25.6611.58%5.87%20.66%
76
Outperform
$3.72B23.6512.12%2.31%48.63%
74
Outperform
$6.43B53.054.74%1.09%1.34%-38.02%
74
Outperform
$6.83B25.4811.12%0.84%4.47%2887.37%
72
Outperform
$3.97B27.1016.49%11.33%18.47%
69
Neutral
$5.25B45.809.01%0.16%10.65%15.22%
61
Neutral
$35.52B8.84-11.06%1.87%8.55%-8.14%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
ESE
Esco Technologies
202.66
87.98
76.72%
LFUS
Littelfuse
262.63
16.70
6.79%
MKSI
MKS
104.49
-0.17
-0.16%
OSIS
OSI Systems
233.55
94.74
68.25%
PLXS
Plexus
138.97
19.43
16.25%
SANM
Sanmina-Sci
120.93
57.96
92.04%

Esco Technologies Corporate Events

M&A TransactionsBusiness Operations and StrategyFinancial Disclosures
ESCO Technologies Reports Strong Q3 2025 Results
Positive
Aug 7, 2025

On August 7, 2025, ESCO Technologies reported its fiscal 2025 third-quarter results, highlighting a 27% increase in sales to $296 million and a 25% rise in adjusted EPS from continuing operations to $1.60. The company completed the sale of VACCO Industries, marking its exit from the space business, and integrated ESCO Maritime Solutions, significantly boosting its Navy business. This strategic shift resulted in a record backlog of $1.17 billion and a book-to-bill ratio of 2.53x, positioning ESCO for continued above-market growth. The company raised its full-year FY 2025 guidance, expecting adjusted EPS growth of 21%-24% over the previous year.

The most recent analyst rating on (ESE) stock is a Hold with a $161.00 price target. To see the full list of analyst forecasts on Esco Technologies stock, see the ESE Stock Forecast page.

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.Date of analysis: Aug 14, 2025