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Nortech Systems Inc. (NSYS)
NASDAQ:NSYS
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Nortech Systems
(NASDAQ:NSYS)
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Rating:46Neutral
Price Target:
$7.00
▲(0.86% Upside)
Nortech Systems' overall stock score is primarily impacted by its weak financial performance, characterized by declining revenues and liquidity challenges. Technical analysis further indicates bearish momentum, while valuation metrics suggest the stock is not attractively priced. The earnings call provided some positive insights into operational improvements, but these are not sufficient to offset the broader financial and market challenges.
Positive Factors
Operational Improvements
Enhanced operational efficiencies through better plant utilization and strategic inventory shifts can lead to sustained cost savings and improved margins.
Customer Backlog Growth
A growing backlog indicates potential future revenue, suggesting strong demand for Nortech's products and services, which can stabilize revenue streams.
Strategic Positioning
Strategic positioning in key regions like Mexico and China aligns with global trade trends, potentially reducing tariff impacts and enhancing competitive advantage.
Negative Factors
Declining Revenue
Declining revenue reflects challenges in maintaining sales momentum, which could impact long-term profitability and market position if not addressed.
Negative Cash Flow
Negative cash flow from operations indicates liquidity challenges, which may limit the company's ability to invest in growth opportunities or manage debt.
Increased Leverage
Rising leverage can strain financial flexibility, potentially increasing risk during economic downturns and impacting the company's ability to finance operations.
Nortech Systems (NSYS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$26.97M
Dividend YieldN/A
Average Volume (3M)4.23K
Price to Earnings (P/E)―
Beta (1Y)0.26
Revenue Growth-13.94%
EPS Growth-157.49%
CountryUS
Employees701
SectorHealthcare
Sector Strength45
IndustryHardware, Equipment & Parts
Share Statistics
EPS (TTM)-0.05
Shares Outstanding2,786,134
10 Day Avg. Volume3,988
30 Day Avg. Volume4,226
Financial Highlights & Ratios
PEG Ratio0.18
Price to Book (P/B)0.83
Price to Sales (P/S)0.22
P/FCF Ratio-8.06
Enterprise Value/Market Cap1.74
Enterprise Value/Revenue0.40
Enterprise Value/Gross Profit2.98
Enterprise Value/Ebitda283.08
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusHold
Number of Analyst Covering0
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Nortech Systems Business Overview & Revenue Model
Company DescriptionNortech Systems (NSYS) is a provider of electronic manufacturing services and solutions, primarily serving the aerospace, defense, medical, and industrial markets. The company specializes in the design and production of advanced electronic components and systems, including printed circuit boards, cable assemblies, and custom electronic solutions. With a focus on quality and innovation, Nortech Systems delivers comprehensive engineering and manufacturing capabilities to meet the evolving needs of its diverse clientele.
How the Company Makes MoneyNortech 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 Earnings Call Summary
Earnings Call Date:Nov 13, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Mar 25, 2026
Earnings Call Sentiment Neutral
The earnings call highlighted significant improvements in manufacturing efficiencies, certifications, and technological advancements, contributing to an improved adjusted EBITDA. However, these were offset by decreased net sales, increased tax expenses, and reduced inventory levels, creating a balanced outlook.Q3-2025 Updates
Positive Updates
Improved Manufacturing Efficiencies
Increased manufacturing efficiencies across customer programs transferred to new plants, driving sustained performance improvement and positive mix shift. Achievements in restructuring efforts and cost discipline were noted.
AS 9100 D and CMMC 2.0 Certifications
Monterrey, Mexico facility achieved AS 9100 D certification for aerospace industry requirements, and CMMC 2.0 certification for US Department of Defense customers, enhancing service offerings and operational excellence.
Strong Customer Backlog
Customer backlog was $77.3 million as of 09/30/2025, consistent with previous periods, indicating sustained demand.
Adjusted EBITDA Improvement
Adjusted EBITDA improved significantly to $1.3 million for the quarter ended 09/30/2025, up from $143,000 in the same period in 2024, reflecting positive impacts from restructuring activities.
Technological Advancements in Fiber Optics
Continued focus on fiber optic technology, including power over fiber, enhancing product performance and aligning with sustainability goals.
Negative Updates
Decrease in Net Sales
Net sales for 2025 totaled $3.5 million, representing a 2.9% decrease from $31.4 million in 2024, impacted by a decrease in aerospace and defense sales and delays in customer product approvals.
Increased Income Tax Expense
Income tax expense in 2025 was $818,000 compared to $56,000 in 2024, resulting in a net loss of $146,000 for the current quarter.
Reduced Inventory Balances
Inventories were reduced to $18.4 million as of 09/30/2025, from $21.6 million as of December 2024, reflecting a planned decrease in inventory balances.
Decrease in Trailing Twelve Months Financials
Trailing twelve months net sales were $116.7 million, compared to $135.6 million for the previous period, with adjusted EBITDA at $700,000, down from $5.9 million.
Company Guidance
During the Nortex Systems Incorporated Third Quarter 2025 Earnings Conference Call, the company provided guidance highlighting several key metrics. Despite a 2.9% decrease in net sales to $30,500,000 from $31,400,000 in 2024, the company reported an improvement in gross profit, which increased to $5,000,000 or 16.4% of net sales, compared to $3,800,000 or 12.2% in the prior year. This improvement was attributed to increased facility utilization and manufacturing productivity. The company also mentioned a strong customer backlog of $77.3 million, consistent with the previous quarter, and an adjusted EBITDA of $1.3 million, significantly up from $143,000 in 2024. While operating expenses decreased by $46,000, the company faced a substantial income tax expense of $818,000, resulting in a net loss of $146,000 for the quarter. The company remains optimistic about future growth, emphasizing its strategic focus on leveraging its advanced fiber optic capabilities and nearshore manufacturing advantages.Nortech Systems Financial Statement Overview
Summary
Nortech Systems faces significant financial challenges with declining revenues, profitability, and cash flows. The income statement and cash flow scores are low due to negative revenue growth and liquidity issues, while the balance sheet shows moderate leverage but negative return on equity.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.45
Neutral
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.55
Neutral
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.40
Negative
| 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
Negative
6.94
Price Trends
8.64
Negative
8.76
Negative
8.92
Negative
Market Momentum
-0.57
Negative
33.35
Neutral
30.88
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NSYS, the sentiment is Negative. The current price of 6.94 is below the 20-day moving average (MA) of 7.43, below the 50-day MA of 8.64, and below the 200-day MA of 8.92, indicating a bearish trend. The MACD of -0.57 indicates Negative momentum. The RSI at 33.35 is Neutral, neither overbought nor oversold. The STOCH value of 30.88 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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
UnderperformOutperform
Sector (51)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
64 Neutral | $31.75M | 35.09 | 2.33% | ― | 14.07% | 153.24% | |
58 Neutral | $63.29M | -86.70 | -3.84% | ― | 38.22% | 70.68% | |
56 Neutral | $292.30M | ― | -8.87% | 5.72% | -9.51% | 29.57% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% | |
46 Neutral | $26.97M | -8.24 | -7.61% | ― | -13.94% | -157.49% | |
42 Neutral | $28.26M | -7.61 | -20.84% | ― | -3.22% | -102.88% | |
41 Neutral | $64.81M | ― | -13.78% | ― | -1.70% | 17.13% |
* Healthcare Sector Average
NSYS
Nortech Systems
6.94
-4.71
-40.43%
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Nortech Systems Corporate Events
Executive/Board Changes
Nortech Systems Director Debarati Sen to Step Down
Neutral
Oct 27, 2025
Debarati Sen, a member of Nortech Systems‘ Board of Directors, has announced she will not seek re-election for the 2026-2027 term. Her decision, which is not due to any disagreements with the company, means she will fulfill her current term until May 2026.
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.