Esco Technologies (ESE) AI Stock Analysis

• Market Cap: $4.89B
• Dividend Yield: 0.21%
• Average Volume (3M): 183.41K
• Price to Earnings (P/E): 41.5
• Beta (1Y): 0.95
• Revenue Growth: 8.40%
• EPS Growth: 20.03%
• Country: US
• Employees: 3,242
• Sector: Technology
• Sector Strength: 86
• Industry: Hardware, Equipment & Parts
• EPS (TTM): 1.35
• Shares Outstanding: 25,824,492
• 10 Day Avg. Volume: 134,940
• 30 Day Avg. Volume: 183,414
• PEG Ratio: 6.01
• Price to Book (P/B): 3.89
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 39.69
• Enterprise Value/Market Cap: 1.02
• Enterprise Value/Revenue: 1.20
• Enterprise Value/Gross Profit: 11.62
• Enterprise Value/Ebitda: 6.18
• 1Y Price Target: $180.50
• Price Target Upside: -4.10% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2

• Rating: 77 Outperform
• Price Target: $224.00 ▲(19.01%Upside)

Esco Technologies' overall stock score of 77 reflects strong financial performance and positive earnings call sentiment, supported by robust order growth and effective acquisition strategy. Technical indicators also suggest bullish momentum, although high valuation metrics may pose a risk. The positive outlook from the earnings call significantly contributes to the score, highlighting the company's effective growth strategy and financial health.

Positive Factors

Acquisitions

The successful acquisition of Maritime Solutions has enhanced the company’s exposure to global Naval expansion and power transmission trends.

Earnings

The company increased its guidance for the full fiscal year, driven by improved margins in Aerospace & Defense and USG.

Financial Performance

ESE reported first quarter adjusted EPS significantly above estimates, indicating strong financial performance.

Negative Factors

Market Challenges

The RF segment is potentially turning a corner, suggesting that previous performance issues might have affected investor confidence.

Operational Challenges

Concerns about the Boeing strikes were offset by strong Navy sales growth in the Aerospace & Defense segment.

Esco Technologies Business Overview & Revenue Model

Company Description

ESCO 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 Money

Esco Technologies generates revenue primarily through the sale of its specialized products and solutions across its three business segments. In the Aerospace & Defense segment, revenue is driven by sales of filtration, fluid control, and other critical components to aerospace and defense contractors. The Utility Solutions Group generates income from providing diagnostic testing solutions, equipment, and services to electric utilities for grid infrastructure management and optimization. The RF Shielding & Test segment earns revenue from designing and manufacturing RF shielding and test equipment used in various commercial and industrial applications. The company also benefits from long-term contracts and partnerships with key industry players, which help ensure a steady stream of income. Additionally, Esco Technologies invests in research and development to innovate and expand its product offerings, contributing to its revenue growth.

Esco Technologies Financial Statement Overview

Summary

Esco Technologies is financially healthy, demonstrating strong revenue growth, profitability, and robust cash flow generation. The balance sheet is solid with low leverage, supporting financial stability. Despite minor fluctuations in EBIT margins, the company's overall performance is commendable, positioning it well for future opportunities.

Income Statement

Esco Technologies shows strong and consistent revenue growth, with TTM revenue increasing by 4.4% from the previous year. The company maintains healthy profitability with a gross profit margin of 40.2% and a net profit margin of 11.0% in the TTM period. Although EBIT margin decreased slightly from the previous year, EBITDA margin improved, reflecting operational efficiency. The overall profitability and growth trajectory are robust, with slight fluctuations in EBIT.

Balance Sheet

The balance sheet reflects a solid financial position with a favorable debt-to-equity ratio of 0.10, indicating low leverage and financial stability. The return on equity (ROE) is strong at 9.2%, showcasing effective use of equity to generate profit. The equity ratio stands at 70.3%, highlighting a strong reliance on equity financing. Esco Technologies demonstrates balance sheet strength, though continued monitoring of debt levels is prudent.

Cash Flow

Cash flow analysis reveals a positive trend in free cash flow growth with a substantial increase of 37.0% in the TTM period. The operating cash flow to net income ratio is above 1, indicating efficient cash generation relative to net income. However, free cash flow to net income ratio suggests room for further improvements. The company's cash flow generation is solid, supporting its growth strategy.

Breakdown	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Income Statement
Total Revenue	1.03B	956.03M	857.50M	715.44M	732.91M
Gross Profit	404.02M	375.66M	332.05M	270.39M	275.50M
EBITDA	200.54M	178.24M	159.63M	124.97M	132.20M
Net Income	101.88M	92.55M	82.32M	63.50M	25.46M
Balance Sheet
Total Assets	1.84B	1.68B	1.65B	1.58B	1.37B
Cash, Cash Equivalents and Short-Term Investments	65.96M	41.87M	97.72M	56.23M	52.56M
Total Debt	156.81M	138.55M	177.85M	182.03M	79.15M
Total Liabilities	601.27M	552.07M	606.30M	557.65M	411.93M
Stockholders Equity	1.24B	1.13B	1.05B	1.02B	961.60M
Cash Flow
Free Cash Flow	91.38M	42.12M	90.26M	87.65M	41.15M
Operating Cash Flow	127.54M	76.89M	135.28M	123.14M	82.28M
Investing Cash Flow	-104.64M	-52.47M	-55.92M	-202.44M	140.95M
Financing Cash Flow	-773.00K	-78.33M	-32.12M	81.47M	-236.22M

Esco Technologies Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 188.22
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ESE, the sentiment is Neutral. The current price of 188.22 is below the 20-day moving average (MA) of 192.34, above the 50-day MA of 186.35, and above the 200-day MA of 155.41, indicating a neutral trend. The MACD of 2.01 indicates Positive momentum. The RSI at 49.25 is Neutral, neither overbought nor oversold. The STOCH value of 29.77 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for ESE.

Esco Technologies Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SANM	77 Outperform	$5.12B	22.16	11.03%	―	-1.50%	1.84%
ESE	77 Outperform	$4.89B	41.47	9.66%	0.21%	8.40%	20.03%
OSIS	75 Outperform	$3.81B	27.57	16.73%	―	14.93%	12.89%
MKSI	74 Outperform	$6.68B	29.67	9.50%	0.88%	-1.14%	―
LFUS	72 Outperform	$5.75B	53.92	4.39%	1.48%	-3.43%	-50.48%
PLXS	68 Neutral	$3.63B	22.77	12.12%	―	2.31%	48.63%
Sector *	50 Neutral	C$3.05B	2.30	-63.57%	2.26%	4.49%	-6.15%

Esco Technologies Corporate Events

ESCO Technologies Reports Strong Q2 2025 Results

On May 7, 2025, ESCO Technologies announced its fiscal 2025 second-quarter results, reporting a 7% increase in sales to $266 million and a 33% rise in GAAP EPS to $1.20. The company also highlighted a 22% increase in orders, resulting in a record backlog of $932 million. The recent acquisition of SM&P, now ESCO Maritime Solutions, is expected to expand ESCO’s naval product offerings. The company raised its full-year guidance, anticipating continued growth driven by strong performance across its segments and the integration of Maritime.

ESCO Technologies Finalizes Major Acquisition for Navy Expansion

On April 25, 2025, ESCO Technologies completed the acquisition of Ultra PMES Limited, Measurement Systems, Inc., EMS Development Corporation, and DNE Technologies, Inc. from Ultra Electronics Holdings Limited for approximately $550 million in cash. This acquisition, which was finalized on April 28, 2025, includes the Signature Management & Power (SM&P) business, enhancing ESCO’s Navy businesses with increased content on US Navy submarine and surface ship programs and expansion into UK and AUKUS navy platforms. The acquisition supports ESCO’s long-term objective of expanding its leadership in high-growth markets, particularly benefiting from increasing global naval defense spending as the US and its allies upgrade their naval defense programs. The impact of this acquisition will be reflected in ESCO’s updated FY 2025 guidance, to be announced on May 7, 2025.