Frequency Electronics (FEIM) AI Stock Analysis

• Market Cap: $466.78M
• Dividend Yield: N/A
• Average Volume (3M): 159.86K
• Price to Earnings (P/E): 23.0
• Beta (1Y): 0.83
• Revenue Growth: 16.06%
• EPS Growth: 166.69%
• Country: US
• Employees: 200
• Sector: Technology
• Sector Strength: 88
• Industry: Communication Equipment
• EPS (TTM): 0.18
• Shares Outstanding: 9,777,647
• 10 Day Avg. Volume: 112,389
• 30 Day Avg. Volume: 159,859
• PEG Ratio: 0.02
• Price to Book (P/B): 3.21
• Price to Sales (P/S): 2.56
• P/FCF Ratio: -55.23
• Enterprise Value/Market Cap: 1.03
• Enterprise Value/Revenue: 6.87
• Enterprise Value/Gross Profit: 17.52
• Enterprise Value/Ebitda: 52.36
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1
• EPS Forecast (FY): 1.02
• Revenue Forecast (FY): $72.22M

• Rating: 67 Neutral
• Price Target: $53.00 ▲(9.21% Upside)
• Action: Downgraded Date: 12/30/25
• Date: Action: Downgraded 12/30/25

The score is driven by a strong profitability turnaround and conservative leverage, plus a bullish price trend. Offsetting these positives are materially negative TTM operating/free cash flow (weak cash conversion versus reported profits), overbought technical signals that raise pullback risk, and a P/E of 25.686 with no dividend yield provided.

Positive Factors

Record Backlog / Revenue Visibility

A record $82M backlog (with management targeting >$100M) provides multi-quarter revenue visibility tied to program deliveries. Durable backlog reduces short-term demand cyclicality, supports production planning and capacity utilization, and underpins predictable near-term revenue conversion.

Niche Mission-Critical Product Franchise

FEIM's focus on precision timing for space, satellites and other mission-critical systems creates high technical barriers, long qualification cycles and customer stickiness. These structural advantages support premium positioning, recurring program work and differentiation across growing end markets like proliferated satellites and quantum sensing.

Strong Balance Sheet / Liquidity

A debt-free position and ~$31M working capital give FEIM financial flexibility to fund NRE, absorb program timing swings, and invest in scale or qualification without near-term refinancing risk. This reduces financial fragility and supports longer-term growth execution in capital-intensive aerospace programs.

Negative Factors

Weak Cash Conversion

Despite strong reported net income (~$21M TTM), operating and free cash flows are negative, indicating working-capital timing or billing/collection issues. Persistent negative cash conversion risks funding for growth, raises quality-of-earnings concerns, and could force financing or slow reinvestment if not remedied.

Margin Sustainability Risk

Recent margin compression from a shift away from high-margin production satellite programs and higher SG&A suggests current high net margins may be partly mix-driven. If lower-margin government/DoD programs persist, operating profitability could be structurally lower and more volatile than recent headline margins imply.

Revenue Concentration / Program Volatility

A rapid rise to ~69% revenue from non-space government/DoD increases dependency on a narrower customer/program set. While defense demand can be durable, program timing, prime-contractor dependence and lower margins can amplify lumpiness and create single-customer or single-program exposure that raises execution and revenue volatility risks.

Frequency Electronics Business Overview & Revenue Model

Company Description

Frequency 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 Money

Frequency 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 Financial Statement Overview

Summary

Income statement shows a strong profitability turnaround with high TTM net margin (~30%) and solid operating margin (~13%), and the balance sheet is conservatively levered (TTM debt-to-equity ~0.14) with very strong TTM ROE (~38%). However, cash flow is a major offset: TTM operating cash flow (~-$3.1M) and free cash flow (~-$6.3M) are negative despite strong reported net income (~$21.0M), creating quality-of-earnings risk until conversion improves.

Income Statement

TTM (Trailing-Twelve-Months) revenue is roughly flat versus the latest annual period (~$69.9M), but the longer-term trajectory is strong, with revenue up materially from FY2023 (~$40.8M) and FY2024 (~$55.3M). Profitability has improved sharply: TTM net margin is high (~30%) with solid operating margin (~13%), a major turnaround from the losses posted in FY2022–FY2023. The key watch-out is that margins have cooled from the most recent annual period (net margin ~34% and higher operating profitability), suggesting earnings may be benefiting from items that may not fully repeat or that cost pressure is increasing.

Balance Sheet

Leverage is conservative, with low debt relative to equity (TTM debt-to-equity ~0.14), providing balance-sheet flexibility. Equity has grown versus FY2023, and returns on equity are currently very strong (TTM ROE ~38%), reflecting the step-up in profitability. The main limitation is that total assets are slightly lower than the prior annual period, and the sharp ROE jump could prove volatile if earnings normalize after the recent surge.

Cash Flow

Cash generation is the weak point: TTM operating cash flow is negative (~-$3.1M) and free cash flow is also negative (~-$6.3M), a notable deterioration from FY2024 when both were strongly positive. This is a mismatch versus strong reported profits (TTM net income ~$21.0M), pointing to working-capital or timing headwinds and raising near-term quality-of-earnings risk. While free cash flow growth shows a large percentage move, the absolute level is still negative, so sustained conversion back to positive cash flow is the key item to monitor.

Breakdown	TTM	Apr 2025	Apr 2024	Apr 2023	Apr 2022	Apr 2021
Income Statement
Total Revenue	69.85M	69.81M	55.27M	40.78M	48.30M	54.25M
Gross Profit	27.40M	30.10M	18.58M	7.85M	8.60M	16.92M
EBITDA	9.17M	14.30M	7.70M	-2.88M	-5.58M	3.62M
Net Income	21.04M	23.80M	5.59M	-5.50M	-8.66M	680.00K
Balance Sheet
Total Assets	92.25M	93.74M	98.47M	90.78M	84.76M	98.53M
Cash, Cash Equivalents and Short-Term Investments	2.99M	4.72M	18.32M	12.05M	21.52M	20.12M
Total Debt	8.40M	8.76M	6.18M	7.64M	9.10M	9.07M
Total Liabilities	33.80M	38.12M	58.66M	57.89M	38.07M	43.12M
Stockholders Equity	58.45M	55.62M	39.82M	32.89M	46.69M	55.41M
Cash Flow
Free Cash Flow	-6.34M	-3.24M	7.22M	257.00K	2.18M	10.92M
Operating Cash Flow	-3.14M	-1.43M	8.71M	1.18M	4.04M	12.16M
Investing Cash Flow	-2.35M	-1.81M	-1.49M	8.67M	-2.28M	-1.19M
Financing Cash Flow	-1.17M	-9.94M	0.00	-9.35M	0.00	-4.96M

Frequency Electronics Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 48.53
• 50DMA: Negative
• 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 FEIM, the sentiment is Positive. The current price of 48.53 is below the 20-day moving average (MA) of 51.03, below the 50-day MA of 51.43, and above the 200-day MA of 33.40, indicating a neutral trend. The MACD of -1.14 indicates Positive momentum. The RSI at 46.44 is Neutral, neither overbought nor oversold. The STOCH value of 50.45 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FEIM.

Frequency Electronics Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BKTI	77 Outperform	$305.30M	25.10	38.74%	―	10.12%	153.04%
FEIM	67 Neutral	$466.78M	23.03	44.70%	―	16.06%	166.69%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
KVHI	58 Neutral	$124.09M	-9.88	-8.78%	―	-9.26%	36.90%
CMTL	52 Neutral	$168.67M	-2.43	-7.88%	―	-1.89%	76.61%
AMPG	50 Neutral	$67.49M	-5.38	-27.13%	―	93.47%	37.19%
OCC	48 Neutral	$51.71M	-31.87	-6.86%	―	9.55%	65.17%