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Key Tronic Corp. (KTCC)
NASDAQ:KTCC
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Key Tronic
(NASDAQ:KTCC)
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Rating:52Neutral
Price Target:
$3.00
▲(11.52% Upside)
The score is held down primarily by weak financial performance (declining revenue, negative margins, and strained free cash flow trends) and limited valuation support (negative P/E reflecting losses). These are partially offset by improving technical momentum and a cautiously constructive earnings update highlighting better operating cash flow, debt reduction, and quantified restructuring savings/new program wins.
Positive Factors
Operational Improvements
The improvement in gross margin indicates better cost management and operational efficiency, which can enhance profitability over the long term.
Debt Reduction
Reducing liabilities strengthens the balance sheet, providing more financial flexibility and reducing risk, which is crucial for long-term stability.
Global Manufacturing Restructuring
Shifting production to Vietnam reduces geopolitical risks and aligns resources with strategic priorities, potentially lowering costs and enhancing competitiveness.
Negative Factors
Revenue Decline
A significant revenue decline reflects reduced demand and delays in new program launches, which could impact future growth and profitability.
Net Loss
Ongoing net losses indicate challenges in achieving profitability, which can strain financial resources and hinder long-term business sustainability.
Customer Bankruptcy Impact
The impact of a customer bankruptcy on financial results highlights vulnerability to client-specific risks, affecting revenue and financial stability.
Key Tronic (KTCC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$31.38M
Dividend YieldN/A
Average Volume (3M)22.55K
Price to Earnings (P/E)―
Beta (1Y)0.53
Revenue Growth-20.03%
EPS Growth-485.19%
CountryUS
Employees4,122
SectorTechnology
Sector Strength88
IndustryComputer Hardware
Share Statistics
EPS (TTM)-0.79
Shares Outstanding10,859,269
10 Day Avg. Volume13,116
30 Day Avg. Volume22,545
Financial Highlights & Ratios
PEG Ratio-0.02
Price to Book (P/B)0.25
Price to Sales (P/S)0.06
P/FCF Ratio1.98
Enterprise Value/Market Cap4.83
Enterprise Value/Revenue0.35
Enterprise Value/Gross Profit4.83
Enterprise Value/Ebitda32.93
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Key Tronic Business Overview & Revenue Model
Company DescriptionKey Tronic Corporation provides contract manufacturing services to original equipment manufacturers in the United States and internationally. The company offers integrated electronic and mechanical engineering, assembly, sourcing and procurement, logistics, and new product testing services. Its services include product design; surface mount technologies and pin through hole capability for printed circuit board assembly; tool making; precision plastic molding; sheet metal fabrication and painting; liquid injection molding; complex assembly; automated tape winding; prototype design; and full product assembly services. The company also manufactures and sells keyboards and other input devices. It markets its products and services primarily through field sales people and distributors. Key Tronic Corporation was incorporated in 1969 and is headquartered in Spokane Valley, Washington.
How the Company Makes MoneyKey Tronic generates revenue through multiple streams primarily based on its electronic manufacturing services. The company earns money by providing contract manufacturing services, where it assembles electronic components for clients, including OEMs (Original Equipment Manufacturers) and other businesses. Revenue is derived from the manufacturing of circuit boards and complete product assemblies, with pricing typically based on the volume and complexity of the orders. Additionally, Key Tronic benefits from long-term partnerships with various industry players, which provide a steady flow of orders. Factors contributing to its earnings include operational efficiency, competitive pricing, and a reputation for high-quality production, which help to attract and retain customers.
Key Tronic Key Performance Indicators (KPIs)
Key Tronic Earnings Call Summary
Earnings Call Date:Feb 03, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:May 05, 2026
Earnings Call Sentiment Neutral
The call presented a mix of material near-term challenges and tangible progress toward longer-term stabilization and growth. Short-term financials were adversely impacted by a $10.5M restructuring charge, a ~15–20% drop in revenue year-over-year, compressed gross and operating margins, and a wider net loss. Offsetting these negatives, the company reported significantly improved operating cash flow, meaningful debt reduction, lower inventory, improved receivables days, adjusted breakeven results (excluding charges), concrete program wins, and strategic capacity builds in the US and Vietnam that should support future growth and tariff mitigation. Management outlined clear cost-saving actions (China wind-down, Mexico right-sizing) with quantified quarterly savings and highlighted a high-potential consigned-materials opportunity (> $25M annual potential). Given the balance of significant current headwinds versus credible, actionable strategic initiatives and early operating improvements, the overall tone is cautious but constructive.Q2-2026 Updates
Positive Updates
Cash Flow and Balance Sheet Improvement
Operating cash flow improved to $6.3M in the quarter from $1.3M a year ago (≈+385%), enabling a year-over-year debt reduction of approximately $13.4M and a 12% decline in inventory (down $12.3M).
Adjusted Profitability (Excluding One-Time Charges)
Adjusted net income was breakeven ($0.00 per share) for the quarter compared to an adjusted net loss of $4.1M (≈$0.38 per share) in the prior-year period; adjusted gross margin (excluding China/Mexico charges) was 7.9% for the quarter.
New Program Wins and Program Ramp
Won new programs in automotive, pest control, and industrial equipment (estimated fully ramped sizes: automotive up to ~$5M, pest control ~$2M, industrial $2–5M). First medical product shipments from Da Nang, Vietnam, and increased program starts in Arkansas and Corinth, Mississippi.
Consigned Materials Program Opportunity
Ramping a consigned-materials manufacturing services contract in Corinth with potential to exceed $25M in annual revenue (management highlights it could materially improve future profitability if successful).
Strategic Near-shoring and Capacity Investments
Investments and capacity builds in US (Arkansas) and Vietnam (doubled capacity, medical capability) position the company to onshore/nearshore production; management expects roughly half of manufacturing to be in US and Vietnam by the end of FY2026 and anticipates double-digit growth in the Arkansas facility in H2.
Operational Efficiency Moves and Future Cost Savings
Planned wind-down of China manufacturing expected to save approximately $1.2M per quarter once complete (targeted Q4), and Mexico workforce reductions expected to save approximately $1.5M per quarter once fully implemented (targeted Q3); full-year CapEx guidance of $8–10M focused on automation and production equipment.
Receivables and Working Capital Improvement
Days sales outstanding improved to 77 days from 99 days a year ago (improvement of 22 days, ≈22% faster collections), reflecting stronger receivables management.
Headcount Reductions and Restructuring Progress
Mexico headcount reduced by ~40% over the past 18 months as part of right-sizing and automation efforts intended to restore competitiveness and quoting success in that region.
Negative Updates
Quarterly Revenue Decline
Total revenue for the quarter was $96.3M versus $113.9M prior-year (decline of $17.6M, ≈-15.5%); first six months revenue was $195.1M vs $245.4M (decline of $50.3M, ≈-20.5%).
Large One-Time Charges Impacting Margins
Charges of approximately $10.5M in the quarter for severance, inventory write-offs and related expenses associated with China wind-down and Mexico reductions materially depressed margins and profitability.
Compressed Margins and Operating Loss
Reported gross margin fell to 0.6% (from 6.8% year-over-year) and operating margin was negative 10.7% (vs negative 1.0% prior-year), reflecting heavy short-term margin pressure from restructuring and lower volumes.
Net Loss Widened Year-over-Year
Net loss was $8.6M ($0.79 per share) for the quarter versus a net loss of $4.9M ($0.46 per share) in the prior-year quarter (loss widened by $3.7M). Year-to-date net loss was $10.9M vs $3.8M a year ago.
Reduced Current Liquidity Ratio
Current ratio decreased to 2.0:1 from 2.8:1 a year ago, indicating a reduction in near-term liquidity cushion despite improvements in cash flow.
Significant Customer-Specific Demand Declines
Reduced demand from a long-standing customer (management estimated roughly a $20M hit) plus transition of an end-of-life program (≈$7M reduction) were notable near-term revenue headwinds; many of the ramps driving future recovery are new programs rather than increased volume from legacy customers.
No Forward Guidance Given Due to Uncertainty
Management did not provide FY or quarterly forward guidance citing uncertain timing of new product ramps and ongoing macroeconomic and tariff-related risks.
Consignment Program Ramping Slower Than Peak Expectations
Consigned-materials program, while promising, is ramping slower than peak expectations due to equipment lead times and operational disruptions (Mississippi ice storm) and is not yet contributing at anticipated scale.
Company Guidance
The company said it will not provide formal forward guidance for FY2026 given macro uncertainty, but expects revenue growth and margin improvement toward breakeven by year‑end: Q2 revenue $96.3M (Q2 FY25 $113.9M), 6‑month revenue $195.1M (FY25 $245.4M), Q2 gross margin 0.6% (operating margin -10.7%) with adjusted Q2 gross margin ex‑charges 7.9% after a ~$10.5M charge, Q2 net loss $8.6M ($0.79/sh) and adjusted Q2 EPS $0.00; 6‑month net loss $10.9M ($1.00). Cash from operations ~$6.3M (vs $1.3M), inventory down $12.3M (‑12%), AR DSO 77 days (vs 99), current ratio 2.0x (vs 2.8x), debt reduced ~$13.4M, Q2 CapEx ~$3.3M (YTD $6.5M; FY guide $8–10M). Operational saves: China wind‑down ~ $1.2M/quarter (Q4), Mexico reductions ~ $1.5M/quarter (post‑Q3); consigned program potential >$25M annual revenue (~$100M turnkey equivalent); new wins: auto up to $5M, pest control $2M, industrial $2–5M; expect ~50% of manufacturing in US+Vietnam by year‑end and double‑digit growth in Arkansas in H2.Key Tronic Financial Statement Overview
Summary
Weak operating results dominate: TTM revenue is declining (-7.01%) with negative net margin (-2.69%) and EBIT margin (-1.03%), and free cash flow growth is down (-34.70%). The balance sheet adds risk with high leverage (debt-to-equity 1.06) and negative ROE (-9.93%), partially offset by some stability signals and recent working-capital improvement noted in the provided materials.Income Statement
Key Tronic's income statement reveals declining revenue with a negative growth rate of -7.01% in the TTM period. The company is struggling with profitability, as evidenced by a negative net profit margin of -2.69% and a negative EBIT margin of -1.03%. The gross profit margin is relatively low at 7.21%, indicating challenges in cost management. Overall, the income statement suggests financial difficulties and a need for strategic improvements.45
Neutral
Balance Sheet
The balance sheet shows a high debt-to-equity ratio of 1.06, indicating significant leverage. Return on equity is negative at -9.93%, reflecting poor profitability. However, the equity ratio is reasonable, suggesting some stability in asset management. The balance sheet highlights financial risk due to high leverage and negative returns.55
Neutral
Cash Flow
Cash flow analysis shows a decline in free cash flow growth by -34.70% in the TTM period. The operating cash flow to net income ratio is 0.18, indicating limited cash generation relative to earnings. The free cash flow to net income ratio is 0.58, suggesting some ability to cover net losses. Overall, cash flow management appears strained, with declining free cash flow and limited operational cash generation.50
Neutral
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 435.06M | 467.87M | 566.94M | 605.32M | 531.82M | 518.70M |
| Gross Profit | 31.38M | 36.43M | 39.95M | 47.55M | 43.21M | 42.04M |
| EBITDA | 4.60M | 10.16M | 17.89M | 26.11M | 16.36M | 16.38M |
| Net Income | -11.70M | -8.32M | -2.79M | 5.16M | 3.38M | 4.34M |
Balance Sheet | ||||||
| Total Assets | 324.56M | 315.87M | 355.34M | 418.27M | 406.92M | 361.85M |
| Cash, Cash Equivalents and Short-Term Investments | 1.12M | 1.38M | 4.75M | 3.60M | 1.71M | 3.47M |
| Total Debt | 121.12M | 118.46M | 137.02M | 134.99M | 114.51M | 116.06M |
| Total Liabilities | 209.76M | 198.74M | 231.35M | 287.65M | 282.05M | 238.14M |
| Stockholders Equity | 114.80M | 117.13M | 123.99M | 130.62M | 124.88M | 123.70M |
Cash Flow | ||||||
| Free Cash Flow | 9.69M | 14.83M | 9.82M | -21.08M | -11.72M | -25.65M |
| Operating Cash Flow | 16.59M | 18.93M | 13.78M | -11.31M | -4.91M | -15.05M |
| Investing Cash Flow | -7.00M | -4.20M | -2.11M | -4.53M | -8.05M | -10.60M |
| Financing Cash Flow | -15.01M | -18.10M | -10.52M | 17.74M | 11.19M | 28.57M |
Key Tronic Technical Analysis
Positive
2.69
Price Trends
2.66
Positive
2.97
Negative
2.90
Positive
Market Momentum
0.05
Negative
63.20
Neutral
66.67
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KTCC, the sentiment is Positive. The current price of 2.69 is below the 20-day moving average (MA) of 2.76, above the 50-day MA of 2.66, and below the 200-day MA of 2.90, indicating a bullish trend. The MACD of 0.05 indicates Negative momentum. The RSI at 63.20 is Neutral, neither overbought nor oversold. The STOCH value of 66.67 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for KTCC.
Key Tronic Risk Analysis
Key Tronic disclosed 34 risk factors in its most recent earnings report. Key Tronic 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
Key Tronic Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
52 Neutral | $31.38M | -2.68 | -9.78% | ― | -20.03% | -485.19% | |
51 Neutral | $68.86M | -4.03 | -19.92% | ― | -2.07% | -535.26% | |
51 Neutral | $35.50M | -4.49 | -23.00% | ― | 8.27% | -308.63% | |
47 Neutral | $9.49M | -3.02 | -17.53% | ― | -13.01% | -65.20% | |
46 Neutral | $19.17M | -0.98 | -7.04% | ― | 154.52% | 47.31% | |
42 Neutral | $12.74M | -0.46 | ― | ― | -24.20% | 1.31% |
* Technology Sector Average
KTCC
Key Tronic
2.91
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Key Tronic Corporate Events
Business Operations and Strategy
Key Tronic advances global manufacturing restructuring and cost savings
Positive
Dec 22, 2025
On December 19, 2025, Key Tronic Corporation approved a plan to cease manufacturing at its China-based facility and convert its operations there to sourcing and procurement support for its other global locations, shifting most of the affected production to existing capacity in Vietnam and other plants. The restructuring, expected to be completed by the fourth fiscal quarter of 2026, is aimed at better aligning resources with strategic priorities, filling recently added Vietnam capacity, and reducing exposure to geopolitical risks, with anticipated savings of about $1.2 million per quarter after completion, offset by roughly $1.3 million in cash severance and compensation costs and an estimated $4.8 million to $5.8 million in non-cash write-offs. Separately, the company’s ongoing restructuring of its Juarez, Mexico facility toward higher-volume manufacturing is projected to generate approximately $2.1 million in quarterly savings after it incurs an additional $2.5 million to $3.5 million in severance charges during its second fiscal quarter, signaling a broader effort to streamline operations and enhance cost efficiency across its manufacturing footprint.
The most recent analyst rating on (KTCC) stock is a Hold with a $2.50 price target. To see the full list of analyst forecasts on Key Tronic stock, see the KTCC Stock Forecast page.
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.