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Richardson Electronics (RELL)
NASDAQ:RELL
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Richardson Electronics
(NASDAQ:RELL)
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Rating:64Neutral
Price Target:
$12.00
▲(6.76% Upside)
Action:ReiteratedDate:02/13/26
The score is driven by strong balance-sheet quality and constructive earnings-call trajectory, supported by bullish technicals. Offsetting these positives are very thin/volatile profitability and cash-flow consistency, plus a stretched valuation (very high P/E) that increases downside sensitivity if execution slips.
Positive Factors
Balance-sheet strength
Extremely low leverage and a large equity base provide durable financial flexibility: the company can fund capex, sustain a small dividend, absorb project timing variability, and pursue strategic investments without relying on external debt, reducing refinancing and solvency risk.
Green Energy Solutions (GES) growth
Rapid GES growth, driven by new product adoption and international orders, indicates a structural expansion into energy-related engineered solutions. That diversification into higher-growth, globally expanding end markets can support more stable, higher-margin backlog over the medium term.
Strategic investments & bookings
Investments in design/demo centers, technology partnerships and initial battery energy storage bookings strengthen engineering capabilities and go-to-market presence. These build repeatable design‑win channels and increase the probability of longer-term subsystem and aftermarket revenue streams.
Negative Factors
Thin and volatile profitability
Margins and returns are very thin and have swung materially across years. Low net margin and near-zero ROE constrain the company's ability to generate internal returns on capital, making long-term growth and capital allocation outcomes highly sensitive to small revenue or cost shifts.
Inconsistent cash generation
Operating and free cash flow have been inconsistent, with a sharp TTM decline in free cash flow. Weak cash conversion limits the firm's capacity to self-fund growth, sustain dividends during downturns, or rapidly scale working-capital heavy programs without tapping reserves or altering investment plans.
Inventory concentration / supplier risk
Concentrated inventory tied to one critical supplier creates supply and valuation risk: supplier exits or disruptions can force higher working capital, shipment delays, or write-downs. This reduces supply‑chain resilience and increases the chance of recurring cash drag from inventory build.
Richardson Electronics (RELL) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$160.90M
Dividend Yield2.25%
Average Volume (3M)49.25K
Price to Earnings (P/E)―
Beta (1Y)0.61
Revenue Growth6.17%
EPS GrowthN/A
CountryUS
Employees407
SectorTechnology
Sector Strength88
IndustryHardware, Equipment & Parts
Share Statistics
EPS (TTM)-0.01
Shares Outstanding12,481,251
10 Day Avg. Volume50,487
30 Day Avg. Volume49,248
Financial Highlights & Ratios
PEG Ratio0.04
Price to Book (P/B)0.70
Price to Sales (P/S)0.53
P/FCF Ratio14.22
Enterprise Value/Market Cap0.81
Enterprise Value/Revenue0.62
Enterprise Value/Gross Profit1.98
Enterprise Value/Ebitda35.29
Forecast
1Y Price Target
$11.00Price Target Upside-2.14% Downside
Rating ConsensusHold
Number of Analyst Covering1
EPS Forecast (FY)0.27
Revenue Forecast (FY)$216.93M
Richardson Electronics Business Overview & Revenue Model
Company DescriptionRichardson Electronics, Ltd. engages in the power and microwave technologies, customized display solutions, and healthcare businesses in North America, the Asia Pacific, Europe, and Latin America. Its Power and Microwave Technologies Group segment provides engineered solutions, power grid and microwave tubes, and related consumables; technical services for microwave and industrial equipment; and power conversion and RF and microwave component for broadcast transmission, CO2 laser cutting, diagnostic imaging, dielectric and induction heating, high energy transfer, high voltage switching, plasma, power conversion, radar, and radiation oncology applications. The company's Canvys segment provides custom display solutions, such as touch screens, protective panels, all-in-one computers, custom enclosures, specialized cabinet finishes, application specific software packages, and certification services to corporate enterprise, financial, healthcare, industrial, and medical original equipment manufacturer markets. Its Healthcare segment manufactures and distributes diagnostic imaging replacement parts for CT and MRI systems; replacement CT and MRI tubes; MRI coils, cold heads, and RF amplifiers; hydrogen thyratrons, klystrons, and magnetrons; flat panel detector upgrades; pre-owned CT systems; and additional replacement solutions, as well as offers CT service training. It serves hospitals, medical centers, asset management companies, independent service organizations, and multi-vendor service providers. The company's products are used to control, switch, or amplify electrical power signals, as well as used as display devices in alternative energy, healthcare, aviation, communications, industrial, marine, medical, military, scientific, and semiconductor markets. The company was founded in 1947 and is headquartered in LaFox, Illinois.
How the Company Makes MoneyRichardson Electronics makes money primarily by selling electronic components, engineered subsystems, and related solutions to OEMs, integrators, service organizations, and end users. Key revenue streams include: (1) Power and Microwave Technologies: revenue from power conversion products (e.g., high-voltage/power components and subsystems) and RF/microwave components (including modules and related items) sold into industrial, communications, and other specialized markets; (2) Canvys: revenue from display solutions and related services sold to industrial and medical OEM customers; (3) Healthcare: revenue from parts and solutions supporting healthcare equipment, including replacement and aftermarket products for installed systems. Across these streams, earnings are driven by product margin on distributed and manufactured items, value-added engineering/customization (design-in wins, integration, and subsystem build), and recurring aftermarket demand for replacement parts where the company supports legacy or long-lived equipment. Specific material partnerships or customer concentration details: null.
Richardson Electronics Earnings Call Summary
Earnings Call Date:Jan 07, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Apr 15, 2026
Earnings Call Sentiment Positive
The call conveyed a predominately positive trajectory: revenue growth for six consecutive quarters, very strong performance in Green Energy (39% growth) and Canvys (28.1% growth), improved operating income and EBITDA, a strong backlog at Canvys, strategic investments (design/demo centers, partnerships), and a healthy cash position. Offsetting items include PMT revenue softness and margin pressure, inventory concentration related to a supplier exit, continuing noise from the prior health-care divestiture affecting YoY comparisons, and residual volatility from project-based businesses. Overall the positive growth, margin improvement in operating expenses, return to profitability, and strategic progress outweigh the listed challenges.Q2-2026 Updates
Positive Updates
Consecutive Quarterly Growth
Company reported its sixth consecutive quarter of year-over-year revenue growth, with consolidated net sales of $52.3 million in Q2 FY26, up 5.7% versus $49.5 million in Q2 FY25 (and +9.0% when excluding the sold health care business).
Strong Green Energy Solutions (GES) Performance
GES sales grew 39.0% year-over-year to $8.3 million and were up 14% sequentially. Growth was driven by Pitch Energy Modules, new product adoption, expanded customer base and international orders (Brazil, Australia, India, France, Italy).
Canvys Revenue and Margin Expansion
Canvys revenue increased 28.1% year-over-year to $8.8 million. Gross margin for Canvys improved to 32.6% (from 31.7%), and Canvys backlog remained strong at $38.0 million, supporting future revenue visibility.
Profitability and Cash Flow Improvement
Operating income improved to approximately $0.13 million in Q2 FY26 from an operating loss of $0.67 million a year ago. Q2 EBITDA improved to $0.7 million (from breakeven), and six-month net income was $1.8 million ($0.12 per diluted share) versus a $0.2 million loss last year.
Strong Cash Position and Capital Discipline
Cash and cash equivalents were $33.1 million at quarter-end, with no outstanding debt on the revolving credit facility. The company declared a quarterly cash dividend of $0.06 per share and is investing excess cash in short-term money market instruments (≈$10 million earning ~4%).
Strategic Investments and New Bookings
Company added design and demo centers (Sweetwater design center to be fully operational in Q3 FY26; Illinois demo center expected Q4 FY26), expanded technology partnerships (KEBA, Goshen, Wulong), booked its first battery energy storage system in December, and is scaling engineered solutions and global expansion efforts.
Operating Expense Efficiency
Operating expenses improved as a percentage of net sales to 30.5% in Q2 FY26 from 32.3% in Q2 FY25, and improved to 29.8% for the first six months versus 31.1% prior-year, contributing to the return to operating profitability.
Negative Updates
PMT Sales Decline and Margin Pressure
PMT sales declined 4.0% year-over-year to $35.2 million in Q2 FY26; consolidated gross margin slipped to 30.8% from 31.0% primarily due to lower margins in PMT and GES. PMT experienced a slight slowdown in the electronic device MRO business despite growth in RF/wireless components.
Health Care Sale Distorts Year‑over‑Year Comparisons
Sale of the majority of the health care business (completed Q3 FY25) continues to complicate YoY comparisons through Q3 FY26, with residual healthcare activities consolidated into PMT and pressuring comparisons in Q2 and Q3.
Inventory Concentration and Elevated Inventory Spend
Elevated inventory investment related to a single critical supplier (powergrid tubes) remains a near-term cash drag. Final receipts of approx. EUR 1.5 million are expected in Q1 CY2026 before inventory levels normalize; inventory concentration posed supply risk requiring mitigation.
Revenue Mix and Project Volatility
Business remains project- and program-focused, causing quarter-to-quarter variability and forecasting uncertainty. Management noted forecasting challenges with some customers and that some GES shipments were fulfilled from stock due to inconsistent forecasts.
Flat or Soft Areas: Semiconductor and Synthetic Diamond Exposure
Semiconductor fab equipment sales were flat in Q2 (though customer forecasts indicate potential H2 CY2026 improvement). Demand for synthetic diamond-related magnetrons has slowed due to market oversupply, reducing contribution from that niche.
Slight Sequential Decline in Cash
Cash decreased from $35.7 million at the end of Q1 FY26 to $33.1 million at quarter-end, reflecting capex ($1.6 million), dividend payments ($0.9 million), and elevated inventory purchases.
Company Guidance
Guidance highlighted continued momentum into the back half of FY‑26 with the company reiterating FY‑26 as a growth year for PMT and GES and several near‑term operational milestones: Sweetwater design center fully operational in Q3 FY‑26 and a LaFox demo center in Q4 FY‑26; completion of ALTA tube production by end of Q3 FY‑26 and launch of repaired Siemens MX tubes as early as Q4 FY‑26 (profitability from the Siemens repair program expected in Q1 FY‑27, possibly Q4 FY‑26); final inventory receipts of ~EUR 1.5M in Q1 calendar 2026 (inventory coverage through 2030); and continued focus on improving inventory turns and cash generation. Key metrics cited alongside that guidance include Q2 net sales $52.3M (+5.7% YoY; +9.0% ex‑healthcare), GES $8.3M (+39% YoY, +14% sequential; ~70% North America; core book‑to‑bill 1.10 with core = 95% of GES), Canvys $8.8M (+28.1%) with backlog $38.0M, PMT $35.2M (‑4% YoY; ~flat ex‑healthcare), Q2 gross margin 30.8% (vs 31.0% prior year), operating expenses 30.5% of sales (vs 32.3%), operating income $0.13M (vs loss $0.67M), Q2 net loss $0.1M (EPS ‑$0.01 vs ‑$0.05), Q2 EBITDA $0.7M (vs breakeven), H1 sales $106.9M (up from $103.2M), H1 EBITDA $4.0M (vs $1.7M), cash $33.1M (down from $35.7M Q1), CapEx $1.6M in Q2 (vs $0.5M prior year), no balance on the revolving credit facility, ~$10M of cash invested at ~4% yield, and a board‑declared quarterly cash dividend of $0.06 per share to be paid in Q3 FY‑26.Richardson Electronics Financial Statement Overview
Summary
Financials are mixed: a very strong balance sheet with minimal leverage (Debt/Equity ~0.01) supports stability, but profitability is thin (TTM net margin ~0.4%, ROE ~0.1%) and results/cash flow have been volatile despite a sharp TTM revenue rebound.Income Statement
Revenue has grown strongly in TTM (Trailing-Twelve-Months) (up ~133% vs. the prior period shown), but profitability remains thin: net margin is ~0.4% in TTM with low operating margins as well. Results have been volatile over the last few years (strong profitability in 2022–2023, near-breakeven in 2024, a loss in 2025 annual, then modestly positive in TTM), which limits confidence in earnings durability despite the recent top-line rebound.46
Neutral
Balance Sheet
The balance sheet is a clear strength: leverage is very low (debt-to-equity ~0.01 in TTM (Trailing-Twelve-Months)), and equity is large relative to the asset base, providing financial flexibility. The main weakness is returns—return on equity is ~0.1% in TTM (Trailing-Twelve-Months), reflecting that the company is not currently generating much profit from its capital despite the conservative balance sheet.83
Very Positive
Cash Flow
Cash generation is mixed. TTM (Trailing-Twelve-Months) operating cash flow is positive (~$5.9M) and free cash flow is also positive (~$1.9M), but free cash flow has sharply declined (down ~77% in TTM). Cash flow has also been inconsistent across years (including negative operating and free cash flow in 2023), and the current conversion of earnings into cash appears modest.50
Neutral
| Breakdown | TTM | May 2025 | May 2024 | May 2023 | May 2022 | May 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 212.59M | 208.91M | 196.46M | 262.66M | 224.62M | 176.94M |
| Gross Profit | 66.05M | 64.80M | 55.66M | 83.69M | 71.70M | 58.83M |
| EBITDA | 3.71M | 6.63M | 4.46M | 28.70M | 19.18M | 5.73M |
| Net Income | 806.00K | -1.14M | 61.00K | 22.33M | 17.93M | 1.66M |
Balance Sheet | ||||||
| Total Assets | 201.77M | 195.84M | 192.44M | 198.05M | 179.82M | 156.75M |
| Cash, Cash Equivalents and Short-Term Investments | 33.14M | 35.90M | 24.26M | 24.98M | 40.49M | 43.32M |
| Total Debt | 1.74M | 2.28M | 2.76M | 2.46M | 3.02M | 2.42M |
| Total Liabilities | 43.29M | 39.18M | 34.49M | 38.73M | 43.97M | 35.19M |
| Stockholders Equity | 158.47M | 156.66M | 157.95M | 159.32M | 135.85M | 121.56M |
Cash Flow | ||||||
| Free Cash Flow | 1.94M | 7.74M | 2.48M | -15.58M | -1.21M | -1.80M |
| Operating Cash Flow | 5.94M | 10.55M | 6.52M | -8.20M | 1.91M | 832.00K |
| Investing Cash Flow | 2.83M | 4.02M | -4.04M | -2.18M | -8.12M | 13.37M |
| Financing Cash Flow | -3.29M | -3.25M | -2.90M | 389.00K | -352.00K | -3.01M |
Richardson Electronics Technical Analysis
Negative
11.24
Price Trends
11.77
Negative
11.16
Positive
10.44
Positive
Market Momentum
-0.26
Positive
42.94
Neutral
24.61
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RELL, the sentiment is Negative. The current price of 11.24 is below the 20-day moving average (MA) of 12.23, below the 50-day MA of 11.77, and above the 200-day MA of 10.44, indicating a neutral trend. The MACD of -0.26 indicates Positive momentum. The RSI at 42.94 is Neutral, neither overbought nor oversold. The STOCH value of 24.61 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RELL.
Richardson Electronics Risk Analysis
Richardson Electronics disclosed 27 risk factors in its most recent earnings report. Richardson Electronics 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
Richardson Electronics Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | $196.30M | 21.66 | 21.02% | ― | 12.79% | 23.79% | |
64 Neutral | $160.90M | -268.55 | 0.51% | 2.25% | 6.17% | ― | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
52 Neutral | $67.65M | 110.94 | 2.42% | ― | 38.22% | 70.68% | |
47 Neutral | $178.92M | -4.46 | -9.42% | 5.93% | -9.51% | 29.57% | |
42 Neutral | $24.98M | -5.93 | -30.89% | ― | -3.22% | -102.88% | |
41 Neutral | $50.24M | -62.24 | -14.57% | ― | -1.70% | 17.13% |
* Technology Sector Average
RELL
Richardson Electronics
11.24
-1.10
-8.94%
DAIO
Data I/O
2.66
0.20
8.13%
MEI
Methode Electronics
5.05
-1.19
-19.10%
CPSH
CPS Technologies
3.76
2.24
147.37%
LINK
Interlink Electronics
3.19
-0.94
-22.76%
MPTI
M-tron Industries Inc
67.00
26.57
65.72%
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.