Nortech Systems (NSYS) AI Stock Analysis

• Market Cap: $24.71M
• Dividend Yield: N/A
• Average Volume (3M): 4.23K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.25
• Revenue Growth: -13.94%
• EPS Growth: -157.49%
• Country: US
• Employees: 701
• Sector: Healthcare
• Sector Strength: 45
• Industry: Hardware, Equipment & Parts
• EPS (TTM): -0.05
• Shares Outstanding: 2,786,134
• 10 Day Avg. Volume: 3,988
• 30 Day Avg. Volume: 4,226
• PEG Ratio: 0.18
• Price to Book (P/B): 0.83
• Price to Sales (P/S): 0.22
• P/FCF Ratio: -8.06
• Enterprise Value/Market Cap: 1.80
• Enterprise Value/Revenue: 0.38
• Enterprise Value/Gross Profit: 2.83
• Enterprise Value/Ebitda: 268.30
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 48 Neutral
• Price Target: $9.00 ▲(21.13% Upside)

The score is held down primarily by weak financial performance (declining revenue, ongoing losses, and negative operating/free cash flow). Technicals also lean negative with the stock below key moving averages and a negative MACD. Offsetting these, the earnings call showed improved margins/adjusted EBITDA and a steady backlog, while the new operations leadership hire is modestly supportive.

Positive Factors

Customer backlog provides multi-quarter visibility

A $77.3M backlog gives durable revenue visibility and supports production planning, capacity utilization, and revenue conversion over coming quarters. It helps smooth demand volatility, underpins near-shoring capacity decisions, and provides a foundation for margin recovery as programs ramp.

Aerospace and defense certifications strengthen competitive position

AS 9100 D and CMMC 2.0 certifications create a durable barrier to entry in aerospace/DoD supply chains, enabling access to higher-specification contracts. These credentials support long-term customer retention, improve win rates for defense work, and justify premium pricing for certified manufacturing.

Operational improvements lifted margins and adjusted EBITDA

Sustained productivity gains and restructuring produced higher gross margins and material adjusted EBITDA improvement, indicating structural cost competitiveness. If maintained, these efficiencies improve cash conversion, margin sustainability, and resilience to lower revenue environments over multiple quarters.

Negative Factors

Sustained revenue decline

A material TTM revenue decline reduces scale, worsens fixed-cost absorption and pressures gross margins. Continued top-line contraction risks eroding customer relationships and program scale, making margin recovery and profitable growth harder without new contract wins or market expansion.

Negative operating and free cash flows

Persistent negative operating and free cash flows constrain reinvestment, capital spending, and debt reduction. Over months this increases reliance on external financing, limits flexibility to pursue new contracts or near-shoring investments, and elevates risk during demand downturns.

Negative ROE and ongoing net losses

Negative ROE and recurring net losses signal inefficient capital use and persistent profitability shortfalls. Without sustained revenue growth or continued structural margin improvements, the company may struggle to generate returns for shareholders and to rebuild equity cushions over the medium term.

Nortech Systems Business Overview & Revenue Model

Company Description

Nortech Systems Incorporated provides design and manufacturing solutions for electromedical devices, electromechanical systems, assemblies, and components in the United States, Mexico, and China. It offers a range of technical and manufacturing, and support services, including project management, designing, testing, prototyping, manufacturing, supply chain management, and post-market services. The company also provides manufacturing and engineering services for medical devices, printed circuit board assemblies, wire and cable assemblies, and higher-level electromechanical assemblies. In addition, it offers engineering and repair services. The company serves original equipment manufacturers in the aerospace and defense, medical, and industrial markets through business development teams and independent manufacturers' representatives. Nortech Systems Incorporated was founded in 1990 and is headquartered in Maple Grove, Minnesota.

How the Company Makes Money

Nortech Systems generates revenue through several key streams, primarily by offering contract manufacturing services to various industries, including aerospace, defense, medical, and industrial sectors. The company earns income by producing electronic components and systems, which includes assembly services for printed circuit boards and cable assemblies. Additionally, Nortech leverages its engineering capabilities to provide design and development services, which contribute to long-term partnerships with clients. Significant revenue is also derived from ongoing contracts with defense and aerospace clients, where high-quality standards and reliability are critical. The company’s strategic partnerships with other technology firms and suppliers also enhance its product offerings and market reach, contributing positively to its overall earnings.

Nortech Systems Financial Statement Overview

Summary

Weak fundamentals: declining revenue and profitability with negative EBIT/EBITDA and net losses (Income Statement 45), plus negative operating and free cash flow signaling liquidity pressure (Cash Flow 40). The balance sheet is comparatively steadier with manageable leverage (debt-to-equity 0.63) but negative ROE (Balance Sheet 55).

Income Statement

Nortech Systems has experienced declining revenue and profitability over the TTM period. The gross profit margin has decreased from previous years, and the company is currently operating at a net loss. The negative EBIT and EBITDA margins indicate operational challenges. Revenue growth has been negative, reflecting a contraction in sales.

Balance Sheet

The balance sheet shows moderate leverage with a debt-to-equity ratio of 0.63, which is manageable but has increased over the past year. Return on equity is negative, indicating inefficiencies in generating returns for shareholders. The equity ratio is stable, suggesting a balanced asset structure.

Cash Flow

Cash flow analysis reveals negative operating and free cash flows, indicating liquidity challenges. The free cash flow to net income ratio is positive, suggesting some ability to cover net losses, but overall cash flow trends are concerning with declining free cash flow growth.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	116.67M	128.13M	139.33M	134.12M	115.17M	104.11M
Gross Profit	15.76M	16.72M	23.10M	20.48M	15.86M	8.46M
EBITDA	166.00K	1.54M	8.00M	5.81M	10.39M	1.58M
Net Income	-2.63M	-1.29M	6.87M	2.01M	7.15M	-1.55M
Balance Sheet
Total Assets	74.76M	72.44M	75.13M	69.54M	67.09M	57.63M
Cash, Cash Equivalents and Short-Term Investments	1.27M	916.00K	960.00K	1.03M	643.00K	352.00K
Total Debt	21.10M	18.04M	14.18M	16.51M	20.21M	21.79M
Total Liabilities	41.40M	38.43M	39.78M	41.46M	40.98M	38.92M
Stockholders Equity	33.36M	34.01M	35.34M	28.08M	26.11M	18.72M
Cash Flow
Free Cash Flow	-2.88M	-3.52M	485.00K	2.96M	-5.83M	844.00K
Operating Cash Flow	-2.07M	-2.25M	1.77M	5.40M	-4.54M	1.36M
Investing Cash Flow	-305.00K	-1.26M	-1.28M	-2.43M	-730.00K	5.50M
Financing Cash Flow	2.42M	2.77M	-1.28M	-2.67M	3.93M	-3.96M

Nortech Systems Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 7.43
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NSYS, the sentiment is Positive. The current price of 7.43 is below the 20-day moving average (MA) of 8.20, below the 50-day MA of 7.55, and below the 200-day MA of 8.58, indicating a bullish trend. The MACD of 0.36 indicates Negative momentum. The RSI at 67.66 is Neutral, neither overbought nor oversold. The STOCH value of 56.58 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for NSYS.

Nortech Systems Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CPSH	64 Neutral	$96.01M	-131.53	-3.84%	―	38.22%	70.68%
LGL	58 Neutral	$39.99M	44.19	2.33%	―	14.07%	153.24%
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%
MEI	50 Neutral	$282.91M	-4.51	-8.87%	5.93%	-9.51%	29.57%
NSYS	48 Neutral	$24.71M	-9.25	-7.61%	―	-13.94%	-157.49%
DAIO	42 Neutral	$29.11M	-7.86	-20.84%	―	-3.22%	-102.88%
LINK	41 Neutral	$55.60M	-28.17	-13.78%	―	-1.70%	17.13%

Nortech Systems Corporate Events

Nortech Systems Appoints New Senior Vice President of Operations

On January 5, 2026, Nortech Systems entered into an employment agreement with Andrew Walko, appointing him Senior Vice President of Global Operations effective January 19, 2026, to succeed retiring executive John Lindeen in the first quarter of 2026. The agreement runs through December 31, 2026 with automatic one-year renewals, provides Walko with a $260,000 annual base salary, eligibility for performance-based bonuses targeting 40% of base pay, participation in company benefits, and a grant of 25,000 non-qualified stock options vesting over five years, along with customary non-solicitation, confidentiality and severance protections, including enhanced severance if terminated without cause following a change of control. Drawing on his prior leadership roles in the medical device sector, Walko will oversee Nortech’s global operations and supply chain across facilities in the U.S., Mexico and China, with a mandate to advance the company’s near-shoring strategy, optimize manufacturing capacity, improve performance and on-time delivery, and deepen customer partnerships to support Nortech’s profitability and long-term growth in its core medical and industrial markets.

The most recent analyst rating on (NSYS) stock is a Hold with a $7.00 price target. To see the full list of analyst forecasts on Nortech Systems stock, see the NSYS Stock Forecast page.