Innovative Solutions And Support (ISSC)
NASDAQ:ISSC
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Innovative Solutions And Support
(NASDAQ:ISSC)
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Rating:70Outperform
Price Target:
$23.50
▲(6.96% Upside)
Action:UpgradedDate:04/18/26
ISSC scores well on fundamentals and recent operating momentum (strong margins, improved cash flow, healthy backlog and low net leverage), further supported by strategically positive portfolio expansion via the Honeywell asset deals. The main offset is weak near-term technicals (price below key moving averages with negative MACD) and management guidance for flat FY2026 organic revenue with mid-40% gross margins, implying potential volatility versus the strong Q1 run-rate.
Positive Factors
High Profitability and Cash Generation
Sustained high gross and net margins indicate durable pricing power and effective cost control in avionics. Material free cash flow growth strengthens internal funding for R&D, capex and M&A, reducing reliance on external financing and supporting long‑term strategic investments.
Negative Factors
Flat FY2026 Organic Revenue Guidance
Guidance for flat organic revenue signals limited near‑term top‑line growth despite strong Q1, constraining pace of scale benefits. Over a multi‑quarter horizon, muted organic growth may pressure expectations for accelerated margin expansion and defer achievement of long‑term revenue targets.
Read all positive and negative factors
Positive Factors
Negative Factors
High Profitability and Cash Generation
Sustained high gross and net margins indicate durable pricing power and effective cost control in avionics. Material free cash flow growth strengthens internal funding for R&D, capex and M&A, reducing reliance on external financing and supporting long‑term strategic investments.
Read all positive factors
Innovative Solutions And Support (ISSC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$378.86M
Dividend YieldN/A
Average Volume (3M)704.72K
Price to Earnings (P/E)20.6
Beta (1Y)1.34
Revenue Growth67.36%
EPS Growth181.48%
CountryUS
Employees133
SectorIndustrials
Sector Strength72
IndustryAerospace & Defense
Share Statistics
EPS (TTM)1.07
Shares Outstanding17,778,343
10 Day Avg. Volume518,467
30 Day Avg. Volume704,716
Financial Highlights & Ratios
PEG Ratio0.11
Price to Book (P/B)3.40
Price to Sales (P/S)2.60
P/FCF Ratio32.32
Enterprise Value/Market Cap0.99
Enterprise Value/Revenue4.16
Enterprise Value/Gross Profit8.18
Enterprise Value/Ebitda12.45
Forecast
1Y Price Target
$34.00Price Target Upside54.76% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
EPS Forecast (FY)0.79
Revenue Forecast (FY)$89.21M
Innovative Solutions And Support Business Overview & Revenue Model
Company Description
Innovative Aerosystems, Inc., engages in the engineering, manufacturing, and supply of advanced avionic solutions. The company provides autothrottles; LPV Navigators; standby displays; COM/NAV/surveillance radio management systems; air data soluti...
How the Company Makes Money
ISSC generates revenue primarily through the sale of avionics products, including flight management systems, cockpit displays, and advanced air data systems to aircraft manufacturers, airlines, and military organizations. These products are typica...
Innovative Solutions And Support Key Performance Indicators (KPIs)
Innovative Solutions And Support Earnings Call Summary
Earnings Call Date:Feb 12, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:May 20, 2026
Earnings Call Sentiment Positive
The call highlighted a strong first quarter with robust top-line growth (+36.5%), large improvements in profitability (gross profit +80%, adjusted EBITDA +140.9%) and excellent cash generation, supported by a healthy backlog ($75M) and resumed F-16 production. Progress on strategic initiatives — notably UMS unit production and defense integration plans, low net leverage (~0.5x), and significant liquidity — reinforce a favorable outlook. Offsetting items are temporary headwinds from manufacturing transitions (~$1.2M F-16, ~$1.0M Pilatus), timing-driven guidance calling for essentially flat organic revenue for the full year, and some integration timing risk with third parties. Overall, the positive operational and financial momentum materially outweighs the manageable near-term challenges.Positive Updates
Strong Top-Line Growth
Net revenues of $21.8M in Q1 FY2026, up 36.5% year-over-year (management cited 37%); product sales $13.6M (up from $10.0M) and service revenue $8.2M (up from $6.0M).
Negative Updates
Temporary Manufacturing Transition Headwinds
F-16 revenues were down modestly in Q1 by approximately $1.2M due to the manufacturing transition and integration timing; IPDG recertification remains planned for the current quarter.
Read all updates
Q1-2026 Updates
Positive
Negative
Strong Top-Line Growth
Net revenues of $21.8M in Q1 FY2026, up 36.5% year-over-year (management cited 37%); product sales $13.6M (up from $10.0M) and service revenue $8.2M (up from $6.0M).
Read all positive updates
Company Guidance
Management guided that organic revenue for fiscal 2026 is expected to be essentially flat year‑over‑year, with Q2 revenue pegged at $20.0–$22.0 million and a steady sequential build thereafter; they expect gross margins to average in the mid‑40% range over the year (despite Q1’s 54.5%), reiterated a long‑term target of $250.0 million in revenue with adjusted EBITDA margins of 25–30%, and noted operational milestones including UMS deliveries to Pilatus beginning mid‑2026 and insourcing F‑16 subassemblies in late‑2026. For context, Q1 metrics that inform the outlook included net revenue $21.8M (+36.5% YoY), product sales $13.6M, service revenue $8.2M, gross profit $11.9M (+80%), operating expenses $5.6M (25.6% of revenue), net income $4.1M (GAAP EPS $0.22), adjusted net income $4.5M (adjusted EPS $0.25), adjusted EBITDA $7.4M (+140.9%), new orders ~$19M, backlog ~$75M, cash from operations $8.2M, capex $1.1M, free cash flow $7.0M, cash $8.3M, total debt $23.8M (net debt $15.5M), total liquidity including credit availability ~$83.3M, and net leverage of 0.5x; management also noted temporary headwinds of ~$1.2M on F‑16 revenues and ~$1.0M on Pilatus as transitions progressed.Innovative Solutions And Support Financial Statement Overview
Summary
Income Statement
86
Very Positive
Balance Sheet
78
Positive
Cash Flow
74
Positive
| Breakdown | TTM | Sep 2025 | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 90.14M | 84.30M | 47.20M | 34.81M | 27.74M | 23.04M |
| Gross Profit | 45.79M | 40.51M | 25.91M | 21.31M | 16.67M | 12.78M |
| EBITDA | 30.08M | 25.41M | 11.89M | 8.73M | 7.71M | 4.33M |
| Net Income | 18.95M | 15.63M | 7.00M | 6.03M | 5.52M | 5.06M |
Balance Sheet | ||||||
| Total Assets | 109.94M | 103.36M | 82.38M | 62.96M | 34.71M | 27.09M |
| Cash, Cash Equivalents and Short-Term Investments | 8.29M | 2.69M | 538.98K | 3.10M | 17.25M | 8.27M |
| Total Debt | 23.53M | 24.14M | 28.03M | 19.51M | 28.68K | 42.98K |
| Total Liabilities | 41.19M | 38.76M | 35.74M | 24.32M | 3.96M | 2.50M |
| Stockholders Equity | 68.74M | 64.60M | 46.64M | 38.64M | 30.75M | 24.59M |
Cash Flow | ||||||
| Free Cash Flow | 12.26M | 6.79M | 5.14M | 1.80M | 5.93M | 4.25M |
| Operating Cash Flow | 19.62M | 13.30M | 5.80M | 2.10M | 6.09M | 4.59M |
| Investing Cash Flow | -7.36M | -6.51M | -16.88M | -36.16M | 2.59M | -340.68K |
| Financing Cash Flow | -4.58M | -4.64M | 8.53M | 19.91M | 301.15K | -19.77M |
Innovative Solutions And Support Technical Analysis
Neutral
21.97
Price Trends
24.62
Negative
20.42
Positive
16.51
Positive
Market Momentum
-0.68
Positive
43.04
Neutral
27.94
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ISSC, the sentiment is Neutral. The current price of 21.97 is below the 20-day moving average (MA) of 23.66, below the 50-day MA of 24.62, and above the 200-day MA of 16.51, indicating a neutral trend. The MACD of -0.68 indicates Positive momentum. The RSI at 43.04 is Neutral, neither overbought nor oversold. The STOCH value of 27.94 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for ISSC.
Innovative Solutions And Support Risk Analysis
Innovative Solutions And Support disclosed 37 risk factors in its most recent earnings report. Innovative Solutions And Support 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
Innovative Solutions And Support Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
70 Outperform | $378.86M | 20.64 | 31.11% | ― | 67.36% | 181.48% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
61 Neutral | $1.02B | 23.06 | 8.72% | 0.92% | 29.70% | -20.41% | |
55 Neutral | $2.12B | 47.74 | -5.01% | ― | 4.85% | -205.95% | |
55 Neutral | $4.71B | -73.03 | -2.08% | ― | 6.58% | 67.04% | |
47 Neutral | $309.41M | 1.54 | -174.08% | ― | ― | ― | |
47 Neutral | $1.01B | -5.44 | -225.72% | ― | ― | -45.97% |
* Industrials Sector Average
ISSC
Innovative Solutions And Support
21.31
14.43
209.74%
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Innovative Solutions And Support Corporate Events
Executive/Board ChangesShareholder Meetings
Innovative Solutions Shareholders Approve Board, Auditor and Pay
Positive
Apr 17, 2026
On April 16, 2026, Innovative Solutions and Support, Inc. held its annual meeting of shareholders, at which investors representing 80% of outstanding common stock were present in person or by proxy, constituting a quorum. Shareholders elected all ...
Business Operations and StrategyM&A Transactions
Innovative Solutions Expands Avionics and Power Management Portfolio
Positive
Apr 2, 2026
On March 27, 2026, Innovative Solutions and Support entered into and closed a $22 million asset purchase and license agreement with Honeywell to acquire general aviation autopilot, nav/com, multifunction display and transponder product lines, incl...
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.