NVE (NVEC) AI Stock Analysis

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NVE

(NASDAQ:NVEC)

61Neutral

NVE Corporation shows a strong financial foundation with high margins and low leverage. However, recent revenue and income declines, combined with increased expenses and weak technical indicators, present challenges. The stock's reasonable valuation and high dividend yield offer some positives, but the negative sentiment from the earnings call weighs on the outlook.

NVE (NVEC) vs. S&P 500 (SPY)

Market Cap

$277.27M

Dividend Yield7.06%

Average Volume (3M)26.09K

Price to Earnings (P/E)18.5

Beta (1Y)1.04

Revenue Growth-27.68%

EPS Growth-30.47%

CountryUS

Employees46

SectorTechnology

Sector Strength44

IndustrySemiconductors

Share Statistics

EPS (TTM)3.10

Shares Outstanding4,837,166

10 Day Avg. Volume31,561

30 Day Avg. Volume26,088

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)12.43

Price to Cash Flow (P/CF)20.80

P/FCF Ratio21.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

NVE Business Overview & Revenue Model

Company DescriptionNVE Corporation (NVEC) is a technology company specializing in the development and commercialization of devices using spintronics, a nanotechnology that relies on electron spin rather than electron charge to acquire, store, and transmit information. The company operates primarily in the sensors and couplers sectors, providing innovative solutions to industries such as industrial, automotive, and medical. NVE's core products include sensors, isolators, and couplers that are used for data acquisition and signal processing applications.

How the Company Makes MoneyNVE Corporation generates revenue through the sale of its spintronic-based products, including sensors and couplers, to various industries. The company's revenue model primarily involves direct sales to manufacturers and distributors who integrate these components into their products and systems. NVE's key revenue streams include sales from its standard product lines as well as custom-designed solutions tailored to specific customer needs. Additionally, the company benefits from licensing its spintronic technology, which provides an additional source of income. Strategic partnerships and collaborations with industry leaders also play a significant role in expanding NVE's market reach and enhancing its product offerings, contributing to the company's financial performance.

NVE Financial Statement Overview

Summary

NVE shows strong profitability with high margins and low leverage, but exhibits variability in revenue and free cash flow growth.

Income Statement

Positive

NVE shows strong profitability with a consistently high gross profit margin and net profit margin. However, the revenue growth has been volatile, with periods of contraction. The EBIT and EBITDA margins are robust, indicating efficient operations.

Balance Sheet

Very Positive

The balance sheet is solid, with a very low debt-to-equity ratio indicating low leverage. The return on equity remains strong, reflecting efficient use of equity capital. The equity ratio is high, suggesting a stable financial position with a strong asset base.

Cash Flow

Positive

The cash flow statement reveals positive free cash flow and strong operating cash flow compared to net income, indicating good cash generation. However, free cash flow growth is inconsistent, which may pose risks to financial flexibility.

TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Breakdown
Income Statement		Total Revenue
25.69M	29.80M	38.25M	26.99M	21.37M	25.41M
	Gross Profit
21.23M	23.03M	30.19M	20.72M	17.24M	20.52M
	EBIT
15.81M	18.52M	25.64M	16.33M	12.74M	15.51M
	EBITDA
16.03M	18.83M	25.64M	16.75M	13.29M	16.06M
	Net Income Common Stockholders
14.99M	17.12M	22.69M	14.51M	11.69M	14.53M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
2.96M	22.20M	17.18M	31.29M	18.11M	27.15M
	Total Assets
57.46M	66.78M	69.26M	67.47M	72.50M	79.50M
	Total Debt
0.00	355.15K	518.71K	602.14K	731.73K	833.73K
	Net Debt
-1.39M	-9.93M	-1.15M	-9.85M	-9.70M	-7.23M
	Total Liabilities
1.51M	1.21M	2.18M	2.90M	1.61M	1.50M
	Stockholders Equity
55.95M	65.57M	67.08M	64.57M	70.89M	78.00M
Cash Flow		Free Cash Flow
13.80M	18.23M	18.16M	12.02M	13.30M	15.84M
	Operating Cash Flow
14.96M	18.25M	19.09M	12.50M	13.36M	15.90M
	Investing Cash Flow
5.06M	9.58M	-8.53M	7.02M	8.42M	5.25M
	Financing Cash Flow
-19.22M	-19.21M	-19.34M	-19.50M	-19.43M	-19.96M

NVE Technical Analysis

Technical Analysis Sentiment

Negative

Last Price56.64

Price Trends

50DMA

65.39

Negative

100DMA

71.06

Negative

200DMA

74.02

Negative

Market Momentum

MACD

-2.59

Negative

RSI

39.86

Neutral

STOCH

53.79

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NVEC, the sentiment is Negative. The current price of 56.64 is below the 20-day moving average (MA) of 60.11, below the 50-day MA of 65.39, and below the 200-day MA of 74.02, indicating a bearish trend. The MACD of -2.59 indicates Negative momentum. The RSI at 39.86 is Neutral, neither overbought nor oversold. The STOCH value of 53.79 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for NVEC.

NVE Risk Analysis

NVE disclosed 13 risk factors in its most recent earnings report. NVE 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

NVE Peers Comparison

Overall Rating

UnderperformOutperform

Sector (58)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MRAM	63 Neutral	$115.56M	157.62	1.34%	―	-20.96%	-92.24%
NVEC	61 Neutral	$277.27M	18.51	23.13%	7.06%	-27.68%	-30.47%
XPER	60 Neutral	$305.88M	―	-3.36%	―	-5.30%	90.66%
Sector *	58 Neutral	$9.99B	10.12	-6.46%	3.10%	7.47%	-11.60%
VLN	55 Neutral	$242.10M	―	-23.83%	―	-31.25%	-79.47%
NVTS	45 Neutral	$342.95M	―	-23.22%	―	4.84%	48.52%

* Technology Sector Average

Performance Comparison

NVEC

NVE

56.64

-19.66

-25.77%

MRAM

Everspin Technologies

5.20

-2.26

-30.29%

VLN

Valens

2.36

-0.03

-1.26%

NVTS

Navitas Semiconductor

1.86

-2.27

-54.96%

XPER

Xperi Inc

6.72

-3.26

-32.67%

NVE Earnings Call Summary

Earnings Call Date: Jan 22, 2025 | % Change Since: -29.94% | Next Earnings Date: Apr 30, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted strong gross margins, significant investment in R&D, and proactive expansion plans, which reflect positively on future potential. However, declines in revenue and net income, along with increased expenses and inventory challenges, present significant concerns. While the company is optimistic about future industry conditions, current negative financial metrics weigh heavily.

Highlights

Increased Gross Margin

Gross margin for the quarter was 84%, up from 80% in the prior year quarter, due to a more profitable product mix and a larger portion of direct sales.

Investment in R&D

R&D spending increased by 61% to 17% of revenue, focusing on new product development activities. New wafer-level chip scale products were introduced, touted as the world's smallest devices of their type.

CapEx and Facility Expansion

Capital expenditure plans of $4 million to $5 million over the next two fiscal years, with $1.16 million already spent. An agreement to extend the building lease for 62 months includes a $100,000 improvement allowance.

Positive Market Outlook

Direct sales held up well with high margins. Industry conditions are seen as improving, with optimism about future prospects and strong business fundamentals.

Lowlights

Revenue and Income Decline

Total revenue for the quarter decreased by 25% due to a 22% decrease in product sales and a 74% decrease in contract R&D revenue. Net income decreased by 27%.

Increased Expenses

Total expenses increased by 40% for the quarter, with SG&A increasing by 12% primarily due to increased sales and marketing activities and additional sales staff.

Interest Income Decline

Interest income for the third quarter decreased by 4% due to a decrease in marketable securities.

Inventory Challenges

Continued inventory lots, particularly in distributor channels, driven by weak chip demand and a slow recovery in industry sectors.

Company Guidance

During the Q3 2025 earnings call for NVE Corporation, the guidance provided highlighted several key metrics. Total revenue for the quarter ended December 31, 2024, decreased by 25% year-over-year, with a 22% drop in product sales and a significant 74% decline in contract R&D revenue. Despite these challenges, the gross margin increased to 84% from 80% in the previous year, primarily due to a more profitable product mix and a shift towards direct sales. Total expenses rose by 40%, driven by a 61% increase in R&D and a 12% rise in SG&A expenses. The company also reported a decrease in net income by 27% compared to the prior year. For the first nine months of fiscal 2025, total revenue fell by 18%, with net income amounting to $11.2 million or $2.31 per diluted share. The fiscal year-to-date gross margin was recorded at 85%, with an operating margin of 63% and a net margin of 60%. In addition, the company has embarked on capital investments of $4 million to $5 million over the next two fiscal years, with $1.16 million already spent, indicating an ongoing commitment to expanding capacity and capabilities.

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.