Education
About Us
Working with TipRanks
Follow Us
Precision Optics Corporation (POCI)
NASDAQ:POCI
Top Page
Precision Optics Corporation
(NASDAQ:POCI)
Select Model
Select Model
Rating:48Neutral
Price Target:
$4.50
▲(6.89% Upside)
Action:ReiteratedDate:02/18/26
The score is held down primarily by deteriorating profitability and ongoing cash burn despite solid revenue growth, which increases funding and execution risk. Technical signals are neutral-to-weak, offering limited momentum support. The earnings call adds some offset via raised revenue guidance and operational improvements, but worsened margin/EBITDA outlook and low cash keep overall risk elevated.
Positive Factors
Sustained Revenue Growth
Consistent top-line growth and a record quarter indicate durable demand across multiple end markets. Strong production revenue and raised FY26 guidance ($26–28M) suggest the company can scale output andretain customer relationships, supporting longer-term revenue resilience despite near-term profit issues.
Operational Ramps & Yield Improvement
Meaningful yield and throughput gains lower unit costs and increase usable output without proportional headcount growth. These structural operational improvements can sustainably lift gross margins and capacity for higher-volume programs, enabling durable margin recovery as processes stabilize and scale.
Program Backlog and Contracted Demand
Established government/defense relationships and rising backlog provide revenue visibility and reduce short-term demand volatility. Program-level orders (aerospace, cystoscope, ophthalmic) create predictable production plans, supporting investment prioritization and longer-term contract-driven cash flows when execution normalizes.
Negative Factors
Severe Margin Deterioration
Steep margin declines driven by scrap, yield shortfalls, tariffs and underutilized engineering capacity materially weaken profitability sustainability. Persistently low margins reduce internal cash generation, make funding growth harder, and require structural fixes to restore long-term operating leverage.
Negative Cash Flow & Tight Liquidity
Ongoing cash burn and a very small cash balance substantially increase financing and execution risk. Limited liquidity constrains investment in R&D and capacity, raises likelihood of dilution or heightened borrowing costs, and reduces the firm's ability to absorb program setbacks over the next several quarters.
Program Concentration Risk
Heavy reliance on a few large programs concentrates revenue and operational risk: any delay, design change, or customer shift could sharply impact results. With weak margins and tight cash, concentration amplifies downside and limits the firm's ability to diversify revenue quickly without additional funding or execution capacity.
Precision Optics Corporation (POCI) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$33.04M
Dividend YieldN/A
Average Volume (3M)22.99K
Price to Earnings (P/E)―
Beta (1Y)0.36
Revenue Growth13.67%
EPS Growth-37.01%
CountryUS
Employees83
SectorHealthcare
Sector Strength45
IndustryMedical - Instruments & Supplies
Share Statistics
EPS (TTM)-0.23
Shares Outstanding7,720,229
10 Day Avg. Volume30,022
30 Day Avg. Volume22,992
Financial Highlights & Ratios
PEG Ratio-0.08
Price to Book (P/B)2.71
Price to Sales (P/S)1.74
P/FCF Ratio-8.82
Enterprise Value/Market Cap1.08
Enterprise Value/Revenue1.46
Enterprise Value/Gross Profit15.02
Enterprise Value/Ebitda-5.49
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
Precision Optics Corporation Business Overview & Revenue Model
Company DescriptionPrecision Optics Corporation, Inc. designs, develops, manufactures, and sells specialized optical and illumination systems and related components primarily in the United States and the European Economic Area. It offers medical instrumentation products, including endoscopes and endocouplers, as well as other custom imaging and illumination products, such as Microprecision lenses and micro medical cameras, and 3D endoscopes for use in minimally invasive surgical procedures by hospitals and physicians. The company also provides components and assemblies for industrial and military use. It markets its products to medical device companies. The company was incorporated in 1982 and is based in Gardner, Massachusetts.
How the Company Makes MoneyPOCI generates revenue primarily through the sale of its optical products and services. Key revenue streams include custom optical component manufacturing, which caters to specialized requirements from sectors like defense and healthcare, and standard optical products sold to various industrial clients. The company also benefits from long-term contracts with government agencies and partnerships with major defense contractors, ensuring a steady flow of income. Additionally, POCI invests in research and development to innovate its product offerings, which helps in capturing new market opportunities and enhancing profitability.
Precision Optics Corporation Key Performance Indicators (KPIs)
Any
Revenue by Segment
Breaks down revenue by different business segments, highlighting which parts of the company are driving growth and profitability, and where there might be challenges or opportunities for expansion.
Breaks down revenue by different business segments, highlighting which parts of the company are driving growth and profitability, and where there might be challenges or opportunities for expansion.
Data provided by:
The Fly
The FlyPrecision Optics Corporation Earnings Call Summary
Earnings Call Date:Feb 17, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:May 14, 2026
Earnings Call Sentiment Neutral
The call presents a mixed but constructive picture: strong top-line momentum and multiple operational improvements (record revenue, program ramps, yield improvements, higher backlog and bookings) are offset by severe near-term margin pressure, negative adjusted EBITDA, low cash, and a one-quarter delay in margin recovery. Management expects margin and EBITDA improvement in H2 and has raised full-year revenue guidance, but financing and execution risks remain.Q2-2026 Updates
Positive Updates
Record Quarterly Revenue
Q2 revenue reached a record $7.4M, up from $4.5M year-over-year and up from $6.7M sequentially.
Robust Production Revenue Growth
Production revenue was approximately $6.4M (or $6.0M net of tariffs per management), representing ~105% year-over-year growth in production-driven revenue and a 9% sequential increase (net of tariffs).
Aerospace Program Momentum
Top-tier aerospace program generated $2.7M in Q2 (net of tariffs $2.5M); operations increased maximum throughput by more than 50% vs end of Q1 and shipments are expected to rise from ~$2.5M in Q2 to over $3.5M in Q4.
Consistent Cystoscope Production Ramp
Single-use cystoscope program achieved $2.0M in Q2 (net of tariffs $1.8M) marking a sixth consecutive quarter of record revenue for that program and showing sequential improvement (Q1 $1.5M).
Ophthalmic Program Rapid Improvement
Single-use ophthalmic program yields improved from ~60% in November to routinely above 90%, daily output increased from ~6 units/day to 20–25 units/day (target 35/day); next order expected 10k–15k units supporting $2M–$3M revenue with gross margin >30%.
Engineering (Product Development) Rebound
Engineering revenue was $1.0M in Q2, up 47% sequentially from $0.7M and bookings for product development reached the highest level in over a year, indicating pipeline recovery.
Ross Optical Market Rebound
Ross Optical delivered >$1M revenue for the second consecutive quarter and enters Q3 with the highest backlog in over 3 years, supporting strong variable-margin upside.
Operational Leadership and Expected Margin Recovery
New COO (appointed Oct) and expanded operations team stabilized production lines, increased throughput on a second partial line, and implemented design/supply updates expected to meaningfully improve yields and gross margin; expected positive adjusted EBITDA by Q4 (shifted one quarter later than prior expectation).
Raised Full-Year Revenue Guidance
Company increased FY2026 revenue guidance to $26M–$28M (previously $25M), driven by stronger-than-expected production demand.
Negative Updates
Sharp Gross Margin Decline
Q2 gross margin fell to 2.8% from 14.2% sequentially and 23.6% year-over-year, driven by high scrap, yield shortfalls, tariff passthrough impacts, and underutilized engineering capacity.
Negative Profitability and Worsened EBITDA Guidance
Q2 adjusted EBITDA was negative $1.5M (vs negative $0.6M year-ago and negative $1.2M sequential). Full-year adjusted EBITDA guidance revised from positive $0.5M to negative $2.5M to negative $3.0M, with year-to-date adjusted EBITDA already negative $2.7M.
Net Loss and Cash Constraints
Q2 net loss was $1.8M (vs $1.0M a year ago). Cash balance at quarter end was approximately $900k with $1.6M of bank debt, necessitating near-term financing (company expects to announce expanded loan facilities in Q3).
Yield and Throughput Challenges Impacting Margins
Cystoscope program yields and labor utilization were below expectations, contributing to low margins; design and supply changes are expected to add ~$150k–$200k quarterly gross profit at current rates once implemented.
Timing Shift in Margin Recovery
Management acknowledged a ~1-quarter delay in margin recovery versus prior expectations, pushing sustainable positive adjusted EBITDA into the next fiscal year rather than this year.
Tariff Pass-Through Complexity
Tariffs are being passed through as both revenue and cost of goods sold, adding volatility and masking some underlying product performance (reported revenue $7.4M; net of tariffs revenue would be ~$7.0M).
Underperformance of Product Development vs Prior Year
Engineering (product development) revenue declined ~29% year-over-year (per management), despite sequential recovery; historic underutilization led to negative profitability in that group during the quarter.
Dependence on a Few Large Programs
A significant portion of growth and future expectations depend on a small number of high-volume programs (aerospace and cystoscope); concentration risk could amplify operational or customer disruptions.
Company Guidance
Precision Optics raised FY26 revenue guidance to $26–28M (from $25M) while revising full‑year adjusted EBITDA to a loss of $2.5–3.0M (prior guide +$0.5M); Q2 results included a record $7.4M revenue (production $6.0M net of tariffs, +92% YoY, +9% sequentially; engineering $1.0M, −29% YoY, +47% sequentially), gross margin of 2.8% (vs. 14.2% in Q1 and 23.6% a year ago) and adjusted EBITDA of −$1.5M (YTD adjusted EBITDA −$2.7M, implying roughly break‑even for the remainder of the year), cash ≈$900k and bank debt $1.6M with an expanded loan facility expected in Q3; operationally the aerospace program generated $2.7M in Q2 (net $2.5M) and is forecast to exceed $3.5M by Q4 with line throughput >50% higher vs. end of Q1 and the potential for ≈$1M incremental quarterly revenue with minimal added headcount, the single‑use cystoscope was $2.0M in Q2 (up from $1.5M in Q1) with expected $150k–$200k quarterly gross profit lift from planned design/supply changes, an ophthalmic program expects its next order of 10k–15k units to support $2–3M in calendar‑year revenue at >30% gross margin (yields up from ~60% in Nov to >90% and output from ~6/day to 20–25/day targeting 35/day), product development bookings are at the highest level in over a year and Ross Optical has >$1M revenue for two quarters and its strongest backlog in over three years; management expects continued improvement in Q3 and positive adjusted EBITDA in Q4, but margin recovery timing shifted about one quarter.Precision Optics Corporation Financial Statement Overview
Summary
Revenue is growing strongly (+13.2% TTM), but operating performance is weak: gross margin collapsed to ~9.7% and net margin is around -28% with widening losses. Cash flow is a major risk (negative operating cash flow and free cash flow), although leverage is not extreme (debt-to-equity ~0.37), leaving only a limited buffer if losses persist.Income Statement
TTM (Trailing-Twelve-Months) revenue grew strongly (+13.2%), but profitability is weak: gross margin fell to ~9.7% (from ~17.8% in FY2025 and ~30%+ in earlier years) and losses widened, with net margin around -28% and operating losses deepening. The trajectory shows a sharp deterioration from FY2023 (near breakeven) to FY2024–TTM, suggesting cost pressure, mix shift, or pricing/volume challenges are overwhelming growth.24
Negative
Balance Sheet
Leverage looks manageable with debt-to-equity around 0.37 in TTM (Trailing-Twelve-Months), and equity remains meaningful (~$9.3M). However, persistent losses are driving a very weak return on equity (about -53% TTM), and rising debt versus FY2025 (while equity declined) reduces balance-sheet flexibility if losses continue.56
Neutral
Cash Flow
Cash generation is a key concern: TTM (Trailing-Twelve-Months) operating cash flow is negative (~-$2.6M) and free cash flow is also negative (~-$3.2M), with free cash flow worsening versus the prior annual period. While free cash flow is “less negative” than net income (free cash flow to net income > 1), the business is still consuming cash, increasing funding risk if conditions don’t improve.22
Negative
| Breakdown | TTM | Jun 2025 | Sep 2024 | Jun 2023 | Jun 2022 | Jun 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 24.42M | 19.09M | 19.10M | 21.04M | 15.68M | 10.67M |
| Gross Profit | 2.37M | 3.40M | 5.80M | 7.73M | 4.93M | 3.43M |
| EBITDA | -6.48M | -5.34M | -2.51M | 286.99K | -526.57K | 50.18K |
| Net Income | -6.92M | -5.78M | -2.95M | -144.61K | -928.42K | -102.83K |
Balance Sheet | ||||||
| Total Assets | 22.90M | 19.79M | 16.91M | 19.74M | 16.70M | 6.26M |
| Cash, Cash Equivalents and Short-Term Investments | 881.49K | 1.77M | 405.28K | 2.93M | 605.75K | 861.65K |
| Total Debt | 3.42M | 2.04M | 3.43M | 3.16M | 3.00M | 251.99K |
| Total Liabilities | 13.57M | 7.53M | 6.84M | 7.69M | 7.73M | 2.83M |
| Stockholders Equity | 9.33M | 12.26M | 10.07M | 12.05M | 8.97M | 3.43M |
Cash Flow | ||||||
| Free Cash Flow | -3.19M | -3.77M | -2.98M | -133.59K | -1.09M | -75.85K |
| Operating Cash Flow | -2.62M | -3.55M | -2.68M | -81.09K | -933.37K | 46.55K |
| Investing Cash Flow | -571.52K | -233.47K | -293.88K | -52.50K | -407.80K | -289.06K |
| Financing Cash Flow | 3.86M | 5.15M | 456.32K | 2.45M | 1.09M | -30.53K |
Precision Optics Corporation Technical Analysis
Negative
4.21
Price Trends
4.61
Negative
4.48
Negative
4.55
Negative
Market Momentum
-0.14
Positive
36.71
Neutral
25.84
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For POCI, the sentiment is Negative. The current price of 4.21 is below the 20-day moving average (MA) of 4.88, below the 50-day MA of 4.61, and below the 200-day MA of 4.55, indicating a bearish trend. The MACD of -0.14 indicates Positive momentum. The RSI at 36.71 is Neutral, neither overbought nor oversold. The STOCH value of 25.84 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for POCI.
Precision Optics Corporation Risk Analysis
Precision Optics Corporation disclosed 32 risk factors in its most recent earnings report. Precision Optics Corporation 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
Precision Optics Corporation Peers Comparison
UnderperformOutperform
Sector (51)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% | |
51 Neutral | $12.34M | -3.04 | -58.34% | ― | 73.38% | 34.87% | |
48 Neutral | $33.04M | -4.61 | -57.98% | ― | 13.67% | -37.01% | |
48 Neutral | $19.92M | -2.98 | -8.05% | ― | -0.95% | 58.17% | |
42 Neutral | $20.81M | -3.20 | -136.47% | ― | 0.59% | -39.76% | |
41 Neutral | $33.91M | -0.79 | -376.23% | ― | 63.53% | 12.49% |
* Healthcare Sector Average
POCI
Precision Optics Corporation
4.28
-0.22
-4.89%
RVP
Retractable Technologies
0.67
-0.13
-16.77%
MLSS
Milestone Scientific
0.26
-0.74
-73.60%
FEMY
Femasys
0.57
-0.97
-63.05%
NXGL
NexGel Inc
1.15
-1.70
-59.65%
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.