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Nortech Systems
(NASDAQ:NSYS)
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Rating:55Neutral
Price Target:
$12.50
▼(-12.28% Downside)
Action:Reiterated
Date:08/17/26
NSYS scores mid-range primarily because financial performance is improving but still unstable (thin margins and historically volatile cash flow), while the latest earnings call reinforced demand visibility via stronger backlog and improving margins. These positives are tempered by weak technicals (below key moving averages with negative MACD) and a relatively high P/E without dividend support.
Positive Factors
Backlog Growth
Strong backlog growth improves demand visibility and supports future production volumes. If converted effectively, it can provide a durable foundation for revenue growth and better operating leverage over the next several quarters.
Negative Factors
Thin Profitability
Very thin profitability leaves limited protection against labor, component, freight, or pricing changes. Revenue volatility also makes earnings less predictable, so the recent recovery may remain vulnerable if demand or program mix weakens.
Read all positive and negative factors
Positive Factors
Negative Factors
Backlog Growth
Strong backlog growth improves demand visibility and supports future production volumes. If converted effectively, it can provide a durable foundation for revenue growth and better operating leverage over the next several quarters.
Read all positive factors
Nortech Systems (NSYS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$35.27M
Dividend YieldN/A
Average Volume (3M)4.23K
Price to Earnings (P/E)33.6
Beta (1Y)0.31
Revenue Growth6.00%
EPS GrowthN/A
CountryUS
Employees699
SectorHealthcare
Sector Strength45
IndustryMedical - Devices
Share Statistics
EPS (TTM)0.37
Shares Outstanding2,853,766
10 Day Avg. Volume3,988
30 Day Avg. Volume4,226
Financial Highlights & Ratios
PEG Ratio1.01
Price to Book (P/B)0.60
Price to Sales (P/S)0.17
P/FCF Ratio9.91
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
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
Nortech Systems Business Overview & Revenue Model
Company Description
Nortech Systems Incorporated, founded in 1990 and headquartered in Maple Grove, Minnesota, specializes in delivering comprehensive design and manufacturing solutions. The company provides end-to-end services for various intricate systems, includin...
How the Company Makes Money
Nortech Systems primarily makes money by providing contract manufacturing and related services to OEM customers. Revenue is generated mainly from (1) manufacturing and assembling electronic and electromechanical products—such as printed circuit bo...
Nortech Systems Earnings Call Summary
Earnings Call Date:Aug 12, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Nov 11, 2026
Earnings Call Sentiment Positive
The call presented a largely constructive operational and financial picture: revenue grew 9.3% YoY, gross margin improved by 120 basis points, backlog increased significantly (90-day backlog +25.8% YoY; total backlog +19.8% YoY), and the company achieved a year-to-date operating turnaround from a loss to positive operating income. Offsetting these positives are meaningful near-term costs and risks — notably materially higher incentive and stock-based compensation that increased operating expenses, short-term declines in aerospace and industrial sales, working capital pressure (low cash balance and inventory build to support backlog), and uncertainty around tariff recoveries and supply chain constraints. Overall the improvements in revenue, margin, backlog and YTD profitability outweigh the listed challenges, suggesting constructive momentum with manageable near-term headwinds.Positive Updates
Revenue Growth
Net sales increased 9.3% year-over-year to $33.5 million in Q2 2026 (up $2.9 million vs Q2 2025).
Negative Updates
Higher Operating Expenses Driven by Incentive Compensation
Total operating expenses rose to $5.1 million in Q2 2026 from $4.1 million a year ago; incentive compensation expense materially increased — $402,000 in Q2 and $647,000 YTD versus a $131,000 reversal in Q2 2025 — resulting in incentive-related expense being $533,000 and $647,000 higher than respective 2025 periods.
Read all updates
Q2-2026 Updates
Positive
Negative
Revenue Growth
Net sales increased 9.3% year-over-year to $33.5 million in Q2 2026 (up $2.9 million vs Q2 2025).
Read all positive updates
Company Guidance
Management did not give formal forward-looking numeric guidance but emphasized converting a stronger backlog, reducing inventory and working capital to generate cash, and driving further margin expansion and operating leverage; they cited Q2 net sales of $33.5M (+9.3% YoY), gross profit $5.7M and gross margin of 17% (up 120 bps), Q2 operating income $623k (YTD operating income $670k vs. prior-year operating loss $871k), and Q2 net income $316k ($0.11 diluted) with YTD net income $282k ($0.09) vs. a $1.0M loss ($0.36) a year earlier. Backlog remained a key leading indicator: 90‑day shipment backlog was $33.4M (+6.3% sequential, +25.8% YoY) and total order backlog was $93.8M (+3.4% sequential, +19.8% YoY). Market trends cited included medical device sales +36% YoY, medical imaging +12.2%, industrial -4.7%, and aerospace & defense -12.8% in Q2 (but +8.7% YTD); incentive compensation expense was $402k (Q2) and $647k (YTD), $533k and $647k higher than 2025 comparatives. Liquidity and working capital metrics: cash and restricted cash $1.7M, revolving credit balance $7.6M with $3.6M unused availability, cash used in operating activities $2.4M YTD (vs. $2.8M prior), cash used by AR/contract assets $4.5M, cash used by inventory $3.5M and cash provided by AP changes $2.1M; management also noted record first-half gross margin and ample capacity across 4 Minnesota sites plus Monterrey and Suzhou to grow without significant CapEx.Nortech Systems Financial Statement Overview
Summary
Income Statement
56
Neutral
Balance Sheet
67
Positive
Cash Flow
52
Neutral
| Breakdown | TTM | Dec 2025 | Mar 2025 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 124.65M | 118.36M | 128.13M | 139.33M | 134.12M | 115.17M |
| Gross Profit | 20.50M | 18.01M | 16.72M | 23.10M | 20.48M | 15.86M |
| EBITDA | 3.42M | 2.26M | 1.54M | 8.00M | 5.81M | 10.39M |
| Net Income | 1.03M | -252.00K | -1.29M | 6.87M | 2.01M | 7.15M |
Balance Sheet | ||||||
| Total Assets | 80.05M | 71.92M | 72.44M | 75.13M | 69.54M | 67.09M |
| Cash, Cash Equivalents and Short-Term Investments | 1.38M | 1.66M | 916.00K | 960.00K | 1.03M | 643.00K |
| Total Debt | 10.02M | 15.71M | 18.04M | 14.18M | 16.51M | 20.21M |
| Total Liabilities | 44.57M | 37.37M | 38.43M | 39.78M | 41.46M | 40.98M |
| Stockholders Equity | 35.47M | 34.55M | 34.01M | 35.34M | 28.08M | 26.11M |
Cash Flow | ||||||
| Free Cash Flow | 1.93M | 2.08M | -3.52M | 485.00K | 2.96M | -5.83M |
| Operating Cash Flow | 3.07M | 2.74M | -2.25M | 1.77M | 5.40M | -4.54M |
| Investing Cash Flow | -122.00K | -157.00K | -1.26M | -1.28M | -2.43M | -730.00K |
| Financing Cash Flow | -1.95M | -1.87M | 2.77M | -1.28M | -2.67M | 3.93M |
Nortech Systems Technical Analysis
Negative
14.25
Price Trends
14.87
Negative
14.31
Negative
11.36
Positive
Market Momentum
-0.48
Positive
37.62
Neutral
8.35
Positive
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 14.25 is above the 20-day moving average (MA) of 14.02, below the 50-day MA of 14.87, and above the 200-day MA of 11.36, indicating a neutral trend. The MACD of -0.48 indicates Positive momentum. The RSI at 37.62 is Neutral, neither overbought nor oversold. The STOCH value of 8.35 is Positive, 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 33 risk factors in its most recent earnings report. Nortech Systems 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
Nortech Systems Peers Comparison
UnderperformOutperform
Sector (51)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
64 Neutral | $97.84M | -374.00 | 0.17% | ― | 26.35% | -130.90% | |
56 Neutral | $89.79M | -73.08 | -10.92% | ― | 7.85% | 45.80% | |
55 Neutral | $35.27M | 33.61 | 2.99% | ― | 6.00% | ― | |
54 Neutral | $641.75M | -15.67 | -5.25% | 1.31% | -2.76% | 42.91% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% | |
50 Neutral | $32.33M | -3.34 | -68.36% | ― | -21.81% | -225.39% | |
44 Neutral | $83.95M | 941.30 | 0.15% | ― | 25.56% | ― |
* Healthcare Sector Average
NSYS
Nortech Systems
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41.04%
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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.