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Nortech (NSYS)
:NSYS
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Nortech Systems
(NASDAQ:NSYS)
Rating:47Neutral
Price Target:
$9.50
▲( 5.20% Upside)
Nortech Systems (NSYS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$24.93M
Dividend YieldN/A
Average Volume (3M)26.18K
Price to Earnings (P/E)6.4
Beta (1Y)0.33
Revenue Growth-12.87%
EPS Growth-148.14%
CountryUS
Employees701
SectorHealthcare
Sector Strength40
IndustryHardware, Equipment & Parts
Share Statistics
EPS (TTM)-0.48
Shares Outstanding2,760,993
10 Day Avg. Volume6,308
30 Day Avg. Volume26,176
Financial Highlights & Ratios
PEG Ratio0.04
Price to Book (P/B)0.74
Price to Sales (P/S)0.00
P/FCF Ratio-2.75
Enterprise Value/Market Cap1.79
Enterprise Value/Revenue0.09
Enterprise Value/Gross Profit3.11
Enterprise Value/Ebitda3.40
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
Nortech Systems Business Overview & Revenue Model
Company DescriptionNortech Systems, Inc. (NSYS) is a leading provider of comprehensive design and manufacturing services for a variety of industries, including medical, aerospace, defense, and industrial markets. The company specializes in electronic manufacturing services (EMS), offering a wide array of solutions such as custom interconnect solutions, wire and cable assembly, printed circuit board assembly, and higher-level complete box build assemblies. Nortech Systems is headquartered in Maple Grove, Minnesota, and operates several manufacturing facilities across the United States and Mexico.
How the Company Makes MoneyNortech Systems generates revenue primarily through its electronic manufacturing services, which involve designing, developing, and manufacturing complex electronic products and systems for its clients. The company operates on a contract manufacturing model, where it partners with original equipment manufacturers (OEMs) to produce customized electronic solutions that meet specific client needs. Key revenue streams include sales from its custom interconnect solutions, printed circuit board assemblies, and full system assemblies. Additionally, Nortech Systems benefits from long-term contracts and strategic partnerships with major players in the medical, aerospace, defense, and industrial sectors, which contribute to stable and recurring revenue. The company's ability to deliver high-quality, tailored solutions helps maintain strong relationships with its clients and drives its financial performance.
Nortech Systems Financial Statement Overview
Summary
Nortech Systems is facing financial difficulties with declining revenues, low profit margins, and negative cash flows. The balance sheet shows moderate leverage, but profitability issues are pressing.Income Statement
Nortech Systems has experienced declining revenue growth with a decrease from $139.3M in 2023 to $120.8M in TTM. Both Gross Profit Margin (11.9%) and Net Profit Margin (-2.8%) are low, indicating challenges in maintaining profitability. The negative EBIT and EBITDA margins further highlight operational inefficiencies.45
Neutral
Balance Sheet
The company maintains a manageable Debt-to-Equity Ratio of 0.66 in TTM, suggesting moderate leverage. However, the Equity Ratio is 44.6%, indicating a balanced but not overly strong equity position. ROE has turned negative due to losses, reflecting a need for improved profitability to enhance shareholder returns.50
Neutral
Cash Flow
The Operating Cash Flow to Net Income Ratio is negative, showing cash outflows exceeding earnings. Free Cash Flow is negative and worsening, with a decline from -$3.5M in 2024 to -$8.8M in TTM. This suggests pressures on cash reserves and a need for better cash management.40
Negative
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 120.81M | 128.13M | 139.33M | 134.12M | 115.17M | 104.11M | Gross Profit |
| 14.35M | 16.72M | 23.10M | 20.48M | 15.86M | 8.46M | EBIT |
| -2.87M | -195.00K | 5.95M | 1.96M | 2.27M | -2.06M | EBITDA |
| -1.62M | 1.54M | 8.00M | 3.87M | 4.97M | 1.58M | Net Income Common Stockholders |
| -3.38M | -1.29M | 6.87M | 2.01M | 7.15M | -1.55M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 1.16M | 916.00K | 960.00K | 1.03M | 643.00K | 352.00K | Total Assets |
| 73.53M | 72.44M | 75.13M | 69.54M | 67.09M | 57.63M | Total Debt |
| 21.57M | 18.04M | 14.18M | 18.06M | 20.21M | 21.79M | Net Debt |
| 20.41M | 17.12M | 13.22M | 17.03M | 19.57M | 21.43M | Total Liabilities |
| 19.98M | 38.43M | 39.78M | 41.46M | 40.98M | 38.92M | Stockholders Equity |
| 32.83M | 34.01M | 35.34M | 28.08M | 26.11M | 18.72M |
| Cash Flow | Free Cash Flow | ||||
| -8.80M | -3.52M | 485.00K | 2.96M | -5.90M | 844.00K | Operating Cash Flow |
| -8.01M | -2.25M | 1.77M | 5.40M | -4.54M | 1.36M | Investing Cash Flow |
| -796.00K | -1.26M | -1.28M | -2.43M | -730.00K | 5.50M | Financing Cash Flow |
| 5.94M | 2.77M | -1.28M | -2.67M | 3.93M | -3.96M |
Nortech Systems Technical Analysis
Neutral
9.03
Price Trends
8.91
Positive
9.57
Negative
10.59
Negative
Market Momentum
0.08
Negative
52.11
Neutral
64.32
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NSYS, the sentiment is Neutral. The current price of 9.03 is above the 20-day moving average (MA) of 8.93, above the 50-day MA of 8.91, and below the 200-day MA of 10.59, indicating a neutral trend. The MACD of 0.08 indicates Negative momentum. The RSI at 52.11 is Neutral, neither overbought nor oversold. The STOCH value of 64.32 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for NSYS.
Nortech Systems Risk Analysis
Nortech Systems disclosed 30 risk factors in its most recent earnings report. Nortech Systems reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Nortech Systems Peers Comparison
Overall Rating
UnderperformOutperform
Sector (53)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
68 Neutral | $42.42M | ― | -18.07% | ― | -13.83% | -476.23% | |
64 Neutral | $36.16M | 90.05 | 1.04% | ― | 28.82% | 60.24% | |
61 Neutral | $18.11M | ― | -19.30% | ― | -22.27% | -1171.98% | |
57 Neutral | $56.97M | ― | -37.98% | ― | 62.28% | 44.68% | |
53 Neutral | $5.14B | 3.23 | -45.01% | 2.85% | 17.55% | -0.69% | |
47 Neutral | $24.93M | 6.41 | -9.81% | ― | -12.87% | -148.14% |
* Healthcare Sector Average
Performance Comparison
NSYS
Nortech Systems
9.03
-2.65
-22.69%
LGL
LGL Group
6.71
1.58
30.80%
REFR
Research Frontiers
1.70
-0.46
-21.30%
SGMA
Sigmatron International
2.96
-1.37
-31.64%
CPSH
CPS Technologies
2.92
1.17
66.86%
Nortech Systems Earnings Call Summary
Earnings Call Date:May 14, 2025
(Q1-2025)
| % Change Since: 3.20%|
Next Earnings Date:Aug 07, 2025
Earnings Call Sentiment Neutral
The call reflects a challenging quarter with significant declines in net sales, gross profit, and adjusted EBITDA. However, strategic realignments, innovative product developments, and a strong North American footprint provide optimism for future growth.Q1-2025 Updates
Positive Updates
Stabilization of Customer Backlog
The customer backlog stabilized as of March 31, 2025, compared to the end of 2024, with a robust pipeline of customer quote opportunities.
North American Footprint Strength
Nortech's North American footprint, specifically the Monterrey maquiladora operations and Minnesota facilities, positions the company well under the framework of the USMCA, reducing direct exposure to tariffs.
Strategic Realignment and Cost Management
Significant actions were undertaken to reduce the cost structure, including the closure of the Blue Earth facility and reduction of headquarters lease space. The restructuring is expected to improve long-term EBITDA generation.
Increased Engineering Opportunities
Opportunities to help customers with Nortech engineering services and near-shoring activities are increasing due to tariff uncertainties.
Innovative Product Developments
Nortech announced advancements like the Expanded Beam Xtreme (EBX) and Active Optical Xtreme (AOX) technologies, enhancing digital data transmission speed, reliability, and security.
Negative Updates
Decrease in Net Sales
Net sales for Q1 2025 totaled $26.9 million, a 21.4% decrease from $34.2 million in Q1 2024, impacted by delays in aerospace and defense customer approvals and manufacturing inefficiencies.
Gross Profit Decline
Gross profit for Q1 2025 was $3.1 million or 11.1% of net sales, down from $5.4 million or 15.9% of net sales in Q1 2024, due to lower net sales and reduced facility utilization.
Negative Adjusted EBITDA
Adjusted EBITDA for the quarter ended March 31, 2025, was negative $1 million, compared to $1.6 million in the same period in 2024.
Inventory and Cash Flow Challenges
Net cash used in operating activities was $2.9 million for the quarter, compared to cash provided of $2.8 million in the same period of 2024. Inventory levels remain high, with plans to reduce them throughout 2025.
Company Guidance
During Nortech Systems Inc.'s First Quarter 2025 Earnings Conference Call, the guidance provided highlighted several key metrics and strategic insights. Net sales for Q1 2025 were reported at $26.9 million, reflecting a 21.4% decrease from $34.2 million in Q1 2024, primarily due to delays in aerospace and defense customer approvals and manufacturing inefficiencies. The company experienced a gross profit of $3.1 million, or 11.1% of net sales, compared to 15.9% the previous year. Nortech's adjusted EBITDA for Q1 2025 was negative $1 million, a significant decline from $1.6 million in the same quarter of 2024. Inventory levels decreased to $20.9 million from $21.6 million at the end of 2024, with plans for further reductions. The company emphasized its strategic initiatives in near-shoring, restructuring, and leveraging its maquiladora operations to mitigate tariff impacts, alongside a robust pipeline of quoting opportunities driven by its fiber optic innovations. Looking forward, Nortech anticipates improved order volume following the completion of aerospace and defense customer approvals and aims to strengthen its balance sheet while focusing on sustainable long-term EBITDA growth.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.