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Frequency Electronics (FEIM)
NASDAQ:FEIM
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Frequency Electronics
(NASDAQ:FEIM)
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Rating:54Neutral
Price Target:
$49.00
▲(6.11% Upside)
Action:ReiteratedDate:03/17/26
Overall score reflects a balance between improved profitability and a strong balance sheet versus notably weak recent cash flow. The earnings call adds support via record backlog and major contract wins, but the stock is penalized by expensive valuation and soft technical momentum.
Positive Factors
Backlog & Contract Wins
A record fully funded backlog (~$83M) plus announced contracts (~$45M) provide multi-quarter revenue visibility and lower near-term sales volatility. Backlog tied to mission programs typically converts over extended timelines, supporting sustained production ramp and predictable revenue recognition as programs progress.
Conservative Balance Sheet
A strong liquidity position and minimal leverage provide staying power for program qualification cycles and upfront investment requirements. Debt-free status and ample working capital reduce refinancing risk and allow management to fund R&D, facility build-out and ramping production without immediate external financing.
Defense Revenue & R&D Pipeline
A growing DoD revenue mix offers more stable, programmatic demand versus commercial satellites. Coupled with targeted R&D into Alt PNT, quantum sensing and proliferated-satellite capabilities, this strengthens long-term addressable markets and creates durable program win potential with multi-year follow-on orders.
Negative Factors
Negative Cash Generation
Persistent negative operating and free cash flow undermines earnings quality and forces reliance on working-capital timing or external funding to bridge investments and program ramps. If cash conversion remains weak, management may need to curtail discretionary spend, raise capital, or delay investments, which can slow growth.
Revenue Mix Volatility
Large swings in satellite revenue reflect lumpy program timing and customer execution, creating forecasting difficulty and potential concentration risk. Reliance on a few major programs means missed timing or funding shifts can materially impact near-term revenue and margins until a broader, steadier order stream is established.
Margin & Cost Headwinds
Mix shifts toward lower-margin programs, higher SG&A and one-time investments are compressing profitability. Early-stage proliferated-satellite production and elevated R&D/one-time facility costs can depress margins until scale and manufacturing learning curves improve, risking longer recovery of operating leverage.
Frequency Electronics (FEIM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$421.43M
Dividend YieldN/A
Average Volume (3M)167.94K
Price to Earnings (P/E)81.9
Beta (1Y)0.84
Revenue Growth16.06%
EPS Growth166.69%
CountryUS
Employees200
SectorTechnology
Sector Strength88
IndustryCommunication Equipment
Share Statistics
EPS (TTM)0.16
Shares Outstanding9,841,927
10 Day Avg. Volume220,735
30 Day Avg. Volume167,935
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 Cap0.99
Enterprise Value/Revenue6.13
Enterprise Value/Gross Profit16.14
Enterprise Value/Ebitda60.82
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusModerate Buy
Number of Analyst Covering1
EPS Forecast (FY)1.21
Revenue Forecast (FY)$72.65M
Frequency Electronics Business Overview & Revenue Model
Company DescriptionFrequency Electronics, Inc., together with its subsidiaries, designs, develops, manufactures, and sells precision time and frequency control products and components for microwave integrated circuit applications. It operates through two segments, FEI-NY and FEI-Zyfer. The FEI-NY segment offers precision time, frequency generation, and synchronization products and subsystems used in communication satellites, terrestrial cellular telephone, or other ground-based telecommunication stations; and other components and systems for the United States military. The FEI-Zyfer segment designs, develops, and manufactures products for precision navigation and timing primarily incorporating global positioning system technologies into radar systems, airborne SIGINT/COMINT platforms, information networks, test equipment, military command and control terminals, and satellite ground stations. The company's products are used in commercial, government satellites, secure communications, command, control, communication, computer, intelligence, security and reconnaissance, and electronic warfare applications for the United States government on land, sea, and air-borne platforms. It markets its products directly and through independent sales representative organizations located in the United States, Europe, and Asia. Frequency Electronics, Inc. was founded in 1961 and is headquartered in Mitchel Field, New York.
How the Company Makes MoneyFEIM primarily makes money by selling engineered frequency-and-timing products and integrated solutions to customers building or operating high-reliability systems—most notably spacecraft and satellite payload/platform programs. Revenue is generated through: (1) Product and subsystem sales: manufacturing and delivery of precision oscillators, frequency references/standards, synthesizers, and related modules used in space-qualified and other high-performance applications; (2) Program-based/contract revenue: many deliveries are tied to customer programs (often with specified technical requirements, qualification, and delivery schedules), so revenue is recognized as units are delivered and/or as contract performance obligations are satisfied, depending on contract structure; (3) Non-recurring engineering (NRE) and custom development: customers may fund design, customization, qualification, and integration work to meet unique mission requirements, creating engineering/service revenue in addition to hardware; (4) Repair, refurbishment, and support: ongoing maintenance and service activities for deployed or customer-owned equipment can contribute incremental revenue. Specific material partnerships, customer concentration details, or segment-level revenue breakdowns are null.
Frequency Electronics Key Performance Indicators (KPIs)
Any
Revenue By Segment
Breaks down earnings from different business units or product lines, highlighting which areas are driving growth and which may need strategic adjustments. Offers insight into the company's diversification and market focus.
Breaks down earnings from different business units or product lines, highlighting which areas are driving growth and which may need strategic adjustments. Offers insight into the company's diversification and market focus.
Data provided by:
The Fly
The FlyFrequency Electronics Earnings Call Summary
Earnings Call Date:Mar 11, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:Jul 09, 2026
Earnings Call Sentiment Positive
The call presented a mix of strong strategic and financial positives—notably two significant contract awards (~$45M), a record $83M backlog (up ~18.6% YoY), substantial growth in DoD revenue (+68.9%), solid liquidity (working capital ~$32M, debt free), and clear progress toward new markets (proliferated satellites, Alt PNT, quantum sensing). Near-term operating results were impacted by revenue timing shifts, mix-related margin pressure, higher operating expenses (including ~ $500K nonrecurring investment), and a large YoY drop in net income largely due to prior-year discrete tax benefits. Overall, management communicated confidence in pipeline expansion, backlog progression toward $100M, and long-term margin improvement as production scales.Q3-2026 Updates
Positive Updates
Two New Contracts Announced (~$45M)
Announced two contracts valued at approximately $45 million (one traditional satellite program and one proliferated-satellite program). Management stated both are significant, will enter backlog in the current fiscal fourth quarter, and reflect wins in both traditional and next-generation markets.
Record Backlog at $83M
Fully funded backlog at January 2026 was a new all-time high of approximately $83 million, up from ~$70 million at the prior fiscal year end (increase of ~$13M, +18.6%). Management is targeting backlog north of $100M over time.
Stable Quarter-over-Quarter Revenue
Consolidated revenue for the quarter was $16.9M, essentially flat with the prior fiscal quarter and still the fourth highest quarter in the past ten years.
Strong Growth in Non-Space U.S. Government / DoD Revenue
Revenue from non-space U.S. government and Department of Defense customers increased to $12.5M from $7.4M year-over-year, an increase of $5.1M (+68.9%), and represented ~74% of consolidated revenue for the quarter.
Solid Balance Sheet and Liquidity
Working capital of approximately $32M and a current ratio of ~2.6:1 as of 01/31/2026. Company is debt free and reported collecting over $11M of cash since 02/01/2026; management expects liquidity to be adequate for the next 12 months.
Investment in Growth Markets and R&D
Increased R&D to $1.8M (from $1.4M), supporting quantum sensing, magnetometers, Alt PNT, and proliferated-satellite production capability. Management highlighted early wins from the new Colorado facility and optimism around new product lines (e.g., Turbo) showing early revenue and expected strong growth.
Pipeline and Market Positioning
Management emphasized multiple additional awards anticipated in calendar year, continued strength in traditional space and defense programs (Patriot, THAAD, B-2), and strategic positioning in proliferated satellites and alternative PNT markets.
Negative Updates
Year-over-Year Revenue Decline
Consolidated revenue declined to $16.9M from $18.9M in the same period last year, a decrease of $2.0M (-10.6%). Management cited prior-year expedited satellite program execution and timing shifts of new bookings as drivers.
Sharp Decline in Satellite Revenue Mix
Revenue from commercial and U.S. government satellite programs fell to ~$4.2M (25% of revenue) from $11.2M (59% prior year), a decline of ~$7.0M (-62.5%), reflecting timing and mix shifts in satellite program execution.
Margin Pressure and Lower Operating Income
Gross margin and gross margin rate decreased YoY due to mix shift toward lower-margin programs and nonrecurring engineering efforts. Operating income was ~$1.3M versus ~$3.5M prior year (down ~$2.2M, -62.9%), and pretax income declined to ~$1.4M from ~$3.6M (-61.1%).
Net Income and EPS Reduction (Comparative Tax Effects)
Consolidated net income was ~$1.6M, or $0.16/share, versus ~$15.4M, or $1.60/share, in the prior-year period (a decline of ~$13.8M, -89.6%). The prior-year quarter included a large discrete tax benefit that materially skewed comparatives.
Rising Operating Expenses and One-Time Costs
Total operating expenses increased by approximately $540K, including ~$500K of nonrecurring expenses (chiefly investments in the Colorado facility). SG&A rose by ~$213K and was ~21% of revenue versus 18% in the prior year, weighing on short-term profitability.
Timing / Booking Push-Outs Affecting Near-Term Revenue
Several new space bookings anticipated for the quarter were shifted into fiscal Q4; management noted funded-backlog recognition depends on customer funding profiles, introducing timing uncertainty for near-term revenue.
Short-Term Margin Risk in Proliferated-Satellite Programs
Management expects initial proliferated-satellite programs may carry lower gross margins during the early learning/production ramp, even though long-term margins are expected to improve as production scales and processes mature.
Company Guidance
Management gave directional guidance rather than formal targets: Q3 revenue was $16.9M (flat sequential, down from $18.9M YoY), with satellite revenue ~$4.2M (25%) and non-space U.S. government/DoD revenue ~$12.5M (74%); gross margin and gross‑margin rate declined year‑over‑year but are expected to move up over time as higher‑rate unit production and follow‑on business scale; SG&A ran ~21% of revenue (vs 18%), R&D was ~$1.8M (10%), operating income ~$1.3M, pretax ~$1.4M and net income ~$1.6M ($0.16/sh) versus $15.4M ($1.60/sh) prior. Fully funded backlog hit a record ~$83M (vs ~$70M at 4/30/25) and two new contracts (~$45M) will start entering Q4 backlog — management expects backlog “north of $100M” in the near term and indicated additional awards this calendar year. Balance sheet/ cash items: working capital ~$32M, current ratio ~2.6:1, debt‑free, >$11M collected since 2/1/26; about $500k of nonrecurring operating expenses contributed to a ~$540k increase in operating expenses, and management expects operating leverage going forward. They also reiterated continued R&D investment, optimism for Turbo (material near‑term growth, multi‑quarter/years upside, previously framed up to ~$20M), and that proliferated‑satellite programs may have lower initial margins but strong long‑term margins.Frequency Electronics Financial Statement Overview
Summary
Mixed fundamentals: income statement profitability has recovered and margins are positive, and the balance sheet is conservatively positioned with low leverage, but cash generation is the key weakness with negative operating cash flow and negative free cash flow in TTM, raising quality-of-earnings and near-term discipline risk.Income Statement
Results show a meaningful recovery versus the 2022–2023 loss years, with profitability now positive. Annual revenue grew strongly in 2024 (+35.6%) and slightly in 2025 (+0.3%), but TTM (Trailing-Twelve-Months) revenue is modestly down (-2.9%), suggesting momentum has cooled. Margins are currently solid in TTM (about 38% gross margin and ~10% operating and net margin), but they are well below the unusually strong 2025 annual profitability (about 34% net margin), indicating earnings power has likely normalized.63
Positive
Balance Sheet
The balance sheet appears conservatively positioned, with low leverage and ample equity: total debt is ~$8.1M against ~$60.2M of equity in TTM (Trailing-Twelve-Months), and debt-to-equity remains low (roughly 0.16–0.23 historically). Equity has grown from 2023 through TTM, supporting financial flexibility. The main watch item is return on equity volatility (very high in 2025, lower in 2024 and TTM), reflecting uneven earnings rather than balance sheet strain.78
Positive
Cash Flow
Cash generation is the weak spot. Operating cash flow is negative in both 2025 and TTM (Trailing-Twelve-Months), and free cash flow is also negative (TTM about -$4.7M), which reduces quality-of-earnings despite reported profitability. While 2024 showed strong positive operating and free cash flow, the sharp reversal in the last two periods points to working-capital or timing pressures and raises near-term funding/discipline risk if it persists.32
Negative
| Breakdown | TTM | Apr 2025 | Apr 2024 | Apr 2023 | Apr 2022 | Apr 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 67.81M | 69.81M | 55.27M | 40.78M | 48.30M | 54.25M |
| Gross Profit | 25.74M | 30.10M | 18.58M | 7.85M | 8.60M | 16.92M |
| EBITDA | 6.83M | 14.30M | 7.70M | -2.88M | -5.58M | 3.62M |
| Net Income | 7.20M | 23.80M | 5.59M | -5.50M | -8.66M | 680.00K |
Balance Sheet | ||||||
| Total Assets | 94.19M | 93.74M | 98.47M | 90.78M | 84.76M | 98.53M |
| Cash, Cash Equivalents and Short-Term Investments | 86.00K | 4.72M | 18.32M | 12.05M | 21.52M | 20.12M |
| Total Debt | 8.13M | 8.76M | 6.18M | 7.64M | 9.10M | 9.07M |
| Total Liabilities | 33.95M | 38.12M | 58.66M | 57.89M | 38.07M | 43.12M |
| Stockholders Equity | 60.24M | 55.62M | 39.82M | 32.89M | 46.69M | 55.41M |
Cash Flow | ||||||
| Free Cash Flow | -4.67M | -3.24M | 7.22M | 257.00K | 2.18M | 10.92M |
| Operating Cash Flow | -934.00K | -1.43M | 8.71M | 1.18M | 4.04M | 12.16M |
| Investing Cash Flow | -2.88M | -1.81M | -1.49M | 8.67M | -2.28M | -1.19M |
| Financing Cash Flow | -1.57M | -9.94M | 0.00 | -9.35M | 0.00 | -4.96M |
Frequency Electronics Technical Analysis
Negative
46.18
Price Trends
52.15
Negative
44.97
Negative
36.45
Positive
Market Momentum
-1.60
Positive
37.33
Neutral
10.75
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FEIM, the sentiment is Negative. The current price of 46.18 is below the 20-day moving average (MA) of 50.32, below the 50-day MA of 52.15, and above the 200-day MA of 36.45, indicating a neutral trend. The MACD of -1.60 indicates Positive momentum. The RSI at 37.33 is Neutral, neither overbought nor oversold. The STOCH value of 10.75 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 |
|---|---|---|---|---|---|---|---|
76 Outperform | $297.43M | 20.23 | 34.98% | ― | 10.12% | 153.04% | |
65 Neutral | $154.86M | -18.31 | -5.49% | ― | -9.26% | 36.90% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
57 Neutral | $68.97M | -27.50 | -3.58% | ― | 9.55% | 65.17% | |
54 Neutral | $421.43M | 81.87 | 12.49% | ― | 16.06% | 166.69% | |
50 Neutral | $65.22M | -106.24 | -21.04% | ― | 93.47% | 37.19% | |
48 Neutral | $111.00M | ― | -9999.00% | ― | -1.89% | 76.61% |
* Technology Sector Average
FEIM
Frequency Electronics
42.82
26.56
163.35%
CMTL
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3.74
1.80
92.78%
KVHI
KVH Industries
7.95
2.83
55.27%
OCC
Optical Cable
7.81
4.22
117.55%
BKTI
BK Technologies
78.57
46.69
146.46%
AMPG
AmpliTech Group
2.59
0.92
55.09%
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.