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Frequency Electronics (FEIM)
:FEIM
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Frequency Electronics
(NASDAQ:FEIM)
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Rating:76Outperform
Price Target:―
Frequency Electronics has demonstrated strong financial performance with significant growth in revenue and profitability, supported by a stable balance sheet and attractive valuation. The positive earnings call sentiment further bolsters its outlook. However, the limited technical indicators and some challenges, such as a decrease in non-space government revenue, slightly temper the overall score.
Frequency Electronics (FEIM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$336.35M
Dividend YieldN/A
Average Volume (3M)353.98K
Price to Earnings (P/E)17.4
Beta (1Y)0.61
Revenue Growth18.30%
EPS Growth262.72%
CountryUS
Employees200
SectorTechnology
Sector Strength88
IndustryCommunication Equipment
Share Statistics
EPS (TTM)0.07
Shares Outstanding9,749,271
10 Day Avg. Volume229,870
30 Day Avg. Volume353,978
Financial Highlights & Ratios
PEG Ratio0.02
Price to Book (P/B)3.21
Price to Sales (P/S)2.56
P/FCF Ratio-55.23
Enterprise Value/Market Cap0.78
Enterprise Value/Revenue3.83
Enterprise Value/Gross Profit9.22
Enterprise Value/Ebitda25.69
Forecast
1Y Price Target
$33.00Price Target Upside-10.13% Downside
Rating ConsensusModerate Buy
Number of Analyst Covering2
Frequency Electronics Business Overview & Revenue Model
Company DescriptionFrequency Electronics, Inc. (FEIM) is a leading provider in the precision time and frequency generation technology sector. The company specializes in developing and manufacturing advanced timing, frequency control, and synchronization products for various markets, including space, defense, commercial communications, and other industrial applications. Their core products include precision oscillators, frequency synthesizers, and time and frequency systems that are critical for ensuring the accuracy and reliability of communications and data transfer systems.
How the Company Makes MoneyFrequency Electronics makes money primarily through the sale of its high-precision timing and frequency control products. The company's revenue model is based on manufacturing and supplying these specialized products to government and commercial entities that require precise time and frequency solutions, such as aerospace and defense contractors, telecommunication companies, and satellite operators. Key revenue streams include contracts with government agencies, such as the Department of Defense, as well as partnerships with major aerospace and defense firms. Additionally, Frequency Electronics generates income through research and development services, often funded by government grants or contracts, which further contribute to their earnings.
Frequency Electronics Earnings Call Summary
Earnings Call Date:Sep 11, 2025
(Q1-2026)
| % Change Since: |
Next Earnings Date:Dec 16, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a mixed sentiment. While the company is strategically expanding into new markets and maintaining a strong backlog and debt-free status, it faced significant revenue and income declines, higher expenses, and reduced gross margins due to customer-driven delays and business mix fluctuations.Q1-2026 Updates
Positive Updates
High Funded Backlog
The company's funded backlog remains at historically high levels, with a value of approximately $71 million at the end of July 2025, compared to $70 million the previous fiscal year.
Expansion into New Markets
The opening of an engineering facility in Boulder, Colorado, to support initiatives in quantum sensing and hire senior scientists formerly with the National Institute of Standards Technology.
Strategic Partnerships and New Initiatives
Hosting the second annual Quantum Sensing Summit in New York City, aiming to strengthen strategic partnerships and expand the company's role in emerging technologies.
Debt-Free Balance Sheet
The company continues to operate with a debt-free balance sheet and a strong working capital position of approximately $30 million.
Share Repurchase Authorization
Authorization for the repurchase of shares worth $20 million, demonstrating a commitment to returning cash to shareholders.
Negative Updates
Revenue Decline
Consolidated revenue for Q1 FY2026 was $13.8 million, down from $15.1 million in the same period of the prior fiscal year, due to customer-driven delays.
Decrease in Gross Margin
Both gross margin and gross margin rate decreased compared to the prior year due to a decline in revenue and business mix fluctuations.
Higher SG&A Expenses
Selling, general, and administrative expenses increased to 26% from 19% of consolidated revenue, partly due to investments in expansion and increased payroll expenses.
Operating Income Decline
Operating income decreased to $364,000 from $2.4 million the previous year, driven by lower revenue and gross margin.
Net Income Reduction
Net income for the quarter dropped to $634,000 from $2.4 million the same period last year, indicating reduced profitability.
Company Guidance
During the Frequency Electronics First Quarter Fiscal 2026 Earnings Call, CEO Thomas McClelland provided insights into the company's recent performance and future outlook. The company reported consolidated revenue of $13.8 million for the quarter ending July 31, 2025, a decrease from $15.1 million in the same period the prior year, primarily due to customer-driven delays. Despite this temporary dip, the company maintains a robust funded backlog of $71 million and continues to see opportunities for growth in space and defense markets, particularly with programs like Golden Dome, Patriot missile system, B-2 bomber, and THAAD. The company is also investing in new initiatives like quantum sensing, with an engineering facility opened in Boulder, Colorado, expected to contribute positively to the bottom line by the third fiscal quarter. Additionally, Frequency Electronics is committed to returning cash to shareholders, as evidenced by a new $20 million share repurchase authorization. The company emphasized its leadership in position, navigation, and timing technologies, which are critical amid global concerns over secure and resilient timing systems.Frequency Electronics Financial Statement Overview
Summary
Frequency Electronics demonstrates strong financial health with impressive revenue and profit growth. The balance sheet indicates low leverage and a solid equity base, contributing to financial stability. While cash flow metrics show positive growth, there is room to improve cash conversion efficiency. The company is well-positioned in the Hardware & Equipment industry, with a promising trajectory.Income Statement
Frequency Electronics has shown a strong performance in the TTM, with a significant increase in total revenue by 18.32% compared to the previous year. The gross profit margin improved to 44.15%, and the net profit margin rose substantially to 35.34%, indicating enhanced profitability. The EBIT and EBITDA margins also showed impressive growth, demonstrating effective cost management and operational efficiency.85
Very Positive
Balance Sheet
The company's balance sheet is stable, with a favorable debt-to-equity ratio of 0.10, reflecting low leverage and a strong equity position. The equity ratio of 59.98% suggests a solid financial foundation. However, the return on equity (ROE) is quite high at 44.59%, driven by the substantial net income in the TTM, which may not be sustainable.72
Positive
Cash Flow
Frequency Electronics exhibits robust cash flow dynamics, with a free cash flow growth rate of 25.26%, indicating efficient cash management. The operating cash flow to net income ratio of 0.27 is moderate, suggesting a need for improved conversion of earnings into cash. The free cash flow to net income ratio of 0.23 further highlights this area for potential enhancement.78
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 68.55M | 69.81M | 55.27M | 40.78M | 48.30M | 54.25M |
| Gross Profit | 28.48M | 30.10M | 18.58M | 7.85M | 8.60M | 16.92M |
| EBITDA | 10.22M | 14.30M | 7.70M | -2.88M | -5.58M | 3.62M |
| Net Income | 21.89M | 23.80M | 5.59M | -5.50M | -8.66M | 680.00K |
Balance Sheet | ||||||
| Total Assets | 51.47M | 93.74M | 83.25M | 74.50M | 85.88M | 86.02M |
| Cash, Cash Equivalents and Short-Term Investments | 4.51M | 4.72M | 18.32M | 12.05M | 21.52M | 20.12M |
| Total Debt | 8.36M | 8.76M | 6.18M | 7.64M | 9.10M | 10.08M |
| Total Liabilities | 36.88M | 38.12M | 43.44M | 41.61M | 39.19M | 30.61M |
| Stockholders Equity | 56.32M | 55.62M | 39.82M | 32.89M | 46.69M | 55.41M |
Cash Flow | ||||||
| Free Cash Flow | -1.00M | -3.24M | 7.22M | 257.00K | 2.18M | 10.92M |
| Operating Cash Flow | 1.25M | -1.43M | 8.71M | 1.18M | 4.04M | 12.16M |
| Investing Cash Flow | -2.26M | -1.81M | -1.49M | 8.67M | -2.28M | -1.19M |
| Financing Cash Flow | -10.53M | -9.94M | 0.00 | -9.35M | 0.00 | -4.96M |
Frequency Electronics Technical Analysis
Positive
36.72
Price Trends
32.65
Positive
27.93
Positive
22.42
Positive
Market Momentum
1.43
Positive
60.28
Neutral
50.78
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FEIM, the sentiment is Positive. The current price of 36.72 is above the 20-day moving average (MA) of 36.01, above the 50-day MA of 32.65, and above the 200-day MA of 22.42, indicating a bullish trend. The MACD of 1.43 indicates Positive momentum. The RSI at 60.28 is Neutral, neither overbought nor oversold. The STOCH value of 50.78 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FEIM.
Frequency Electronics Risk Analysis
Frequency Electronics disclosed 17 risk factors in its most recent earnings report. Frequency Electronics reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Frequency Electronics Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $259.27M | 23.54 | 39.51% | ― | 4.63% | 328.61% | |
76 Outperform | $336.35M | 17.41 | 49.16% | ― | 18.30% | 262.72% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
56 Neutral | $66.97M | -54.42 | -5.41% | ― | 12.67% | 80.62% | |
54 Neutral | $108.64M | -17.23 | -4.46% | ― | -12.22% | 71.69% | |
50 Neutral | $77.97M | ― | -30.53% | ― | 58.04% | 21.09% | |
44 Neutral | $85.54M | -0.31 | -43.88% | ― | -12.02% | -615.33% |
* Technology Sector Average
FEIM
Frequency Electronics
39.76
27.34
220.13%
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3.13
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-15.41%
KVHI
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5.57
0.78
16.28%
OCC
Optical Cable
8.01
5.61
233.75%
BKTI
BK Technologies
69.44
42.93
161.94%
AMPG
AmpliTech Group
3.37
2.32
220.95%
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.