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RF Industries (RFIL)
NASDAQ:RFIL
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RF Industries
(NASDAQ:RFIL)
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Rating:60Neutral
Price Target:
$10.00
▼(-4.94% Downside)
Action:ReiteratedDate:03/17/26
The score is driven primarily by improving but still fragile financial performance (stronger cash generation and moderating leverage offset by steep TTM revenue decline and very thin net margins). Technicals are supportive with price above major moving averages and positive MACD. These positives are partially offset by very weak valuation optics due to an extremely high P/E, while the earnings call added incremental support via stronger backlog and guidance for accelerating revenue and continued margin improvement.
Positive Factors
Strong cash generation
Consistent positive operating and free cash flow, with FCF materially exceeding reported earnings, provides durable internal funding for working capital, backlog execution, and debt paydown. This reduces reliance on external financing and supports operational resilience across multiple quarters.
Improving gross margins
A sustained ~32% gross margin driven by price realization and better product mix supports structural margin recovery. Higher gross margins increase tolerance for SG&A and R&D, enable operating‑leverage gains as revenue scales, and make the company’s target of mid‑teens EBITDA more achievable over time.
Backlog growth & demand diversification
A materially larger backlog coupled with bookings across small cell, DAC, and custom cabling signals multi‑market traction and improved revenue visibility. Diversified end markets reduce single‑project dependence and support multi‑quarter top‑line recovery if backlog converts as expected.
Negative Factors
Sharp TTM revenue decline
A near‑30% TTM revenue decline erodes scale benefits and weakens fixed‑cost absorption, making margin targets harder to reach. Without sustained top‑line recovery, operational improvements and cash flow gains may be offset by lower utilization and renewed pressure on profitability across coming quarters.
Very thin net margins and low ROE
Extremely low net margins and sub‑1% ROE constrain reinvestment and shareholder returns. Profitability remains sensitive to small cost or pricing swings, limiting the company’s ability to self‑fund growth initiatives and increasing downside risk if market conditions or input costs deteriorate.
Working‑capital usage and revolver draw
Significant inventory and a $7.1M revolver draw indicate tight working‑capital dynamics. Continued reliance on the revolver or elevated inventory levels could increase interest expense and liquidity risk if revenue conversion from backlog slows, constraining flexibility over multiple quarters.
RF Industries (RFIL) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$113.77M
Dividend YieldN/A
Average Volume (3M)255.02K
Price to Earnings (P/E)―
Beta (1Y)0.76
Revenue Growth24.25%
EPS GrowthN/A
CountryUS
Employees302
SectorIndustrials
Sector Strength72
IndustryElectrical Equipment & Parts
Share Statistics
EPS (TTM)0.06
Shares Outstanding10,814,267
10 Day Avg. Volume399,903
30 Day Avg. Volume255,021
Financial Highlights & Ratios
PEG Ratio-10.98
Price to Book (P/B)2.37
Price to Sales (P/S)1.03
P/FCF Ratio19.17
Enterprise Value/Market Cap1.18
Enterprise Value/Revenue1.67
Enterprise Value/Gross Profit5.22
Enterprise Value/Ebitda36.58
Forecast
1Y Price Target
$11.25Price Target Upside6.94% Upside
Rating ConsensusHold
Number of Analyst Covering1
EPS Forecast (FY)0.43
Revenue Forecast (FY)$84.59M
RF Industries Business Overview & Revenue Model
Company DescriptionRF Industries, Ltd., together with its subsidiaries, designs, manufactures, and markets interconnect products and systems in the United States, Canada, Mexico, and internationally. The company operates through two segments, RF Connector and Cable Assembly and Custom Cabling Manufacturing and Assembly. The company's RF Connector and Cable Assembly segment designs, manufactures, and distributes various coaxial connectors and cable assemblies that are integrated with coaxial connectors. The Custom Cabling Manufacturing and Assembly segment designs, manufactures, markets, and distributes custom copper and fiber cable assemblies, complex hybrid fiber optic and power solution cables, energy-efficient cooling systems for wireless base stations and remote equipment shelters, and custom designed pole-ready 5G small cell integrated enclosures. It also manufactures and sells custom and standard cable assemblies, hybrid fiber optic power solution cables, adapters, and electromechanical wiring harnesses for communication, computer, LAN, automotive, and medical equipment. In addition, the company designs and manufactures cable assemblies and wiring harnesses for blue chip industrial, oilfield, instrumentation, and military customers. It also designs and manufactures quality connectivity solutions to telecommunications and data communications distributors. The company sells its products through warehousing distributors and in-house marketing and sales team. It serves telecommunications carriers and equipment manufacturers, wireless and network infrastructure carriers, and original equipment manufacturers. The company was formerly known as Celltronics, Inc. and changed its name to RF Industries, Ltd. in November 1990. RF Industries, Ltd. was incorporated in 1979 and is headquartered in San Diego, California.
How the Company Makes MoneyRF Industries makes money primarily by selling interconnect hardware and connectivity solutions to business customers. Key revenue streams include: (1) product sales of connectors and adapters (e.g., RF/coax and other connector families) and associated components; (2) cable assemblies, where the company manufactures or sources cable and builds terminated assemblies to customer specifications—these are typically higher-value than individual connectors because they include materials plus assembly labor and engineering; and (3) value-added/custom solutions, including engineered interconnect systems and wiring/assembly services where RF Industries designs, builds, and tests assemblies for customer equipment or installations. Revenue is recognized from the shipment/delivery of these goods and assemblies under customer purchase orders and contracts. The company’s earnings are influenced by product mix (commodity components vs. custom assemblies), volume from industrial and communications infrastructure demand, and its ability to source components and manage manufacturing/assembly efficiently. Specific material partnerships, customer concentration details, and segment-by-segment revenue breakdowns are null.
RF Industries Earnings Call Summary
Earnings Call Date:Mar 16, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Jun 11, 2026
Earnings Call Sentiment Positive
The call presented meaningful progress on profitability, margin expansion, backlog growth, and operational resilience while revenue was roughly flat YoY and seasonally down sequentially. Key positives include a 250 bp gross margin improvement to 32.3%, a roughly 3x increase in operating income, ~27% growth in adjusted EBITDA to ~$1.1M, a substantial backlog increase to $18.6M, and reduced net debt. Remaining challenges are Q1 seasonality and flat YoY sales, backlog timing volatility, adjusted EBITDA still below the company’s 10% target, and some delayed integrated systems orders. Taken together, the strong margin and backlog momentum and diversified market traction outweigh the near-term top-line and timing risks.Q1-2026 Updates
Positive Updates
Stable Net Sales with Seasonal Context
Q1 net sales of $19.0M were essentially flat year-over-year ($19.2M) and reflect normal seasonality (down 16% sequentially from $22.7M). Management noted this quarter's sales mix was more diversified versus prior-year Q1 anomaly.
Gross Margin Expansion
Gross profit margin improved by 250 basis points to 32.3% from 29.8% YoY, driven by price realization, better product mix, and operational efficiencies.
Operating Income and Profitability Improvement
Operating income increased to $177k from $56k a year ago (roughly a 3x increase), and consolidated net loss narrowed to $50k (essentially $0.00 per diluted share) from a $245k loss in Q1 2025.
Non-GAAP Income and Adjusted EBITDA Growth
Non-GAAP net income rose to $659k ($0.06 per diluted share) from $397k ($0.04) in Q1 2025 (+~66%). Adjusted EBITDA increased to ~$1.1M (5.6% of sales) from $867k (4.5% of sales), a rise of ~27% YoY.
Significant Backlog Increase
Backlog expanded materially to $18.6M (management noted an increase of over $6M since mid-January when backlog was ~$12.4M) — roughly a 50% increase versus that mid-January reference and +29% versus the Jan 31 reported backlog of $14.4M.
Diverse Revenue Drivers and Product Traction
Momentum across multiple end markets (telecom, custom cabling, aerospace, industrial, edge data centers, small cell, DAC thermal cooling) with particular traction in DAC direct air cooling and small cell configurations driving bookings.
Balance Sheet and Liquidity Improvements
Cash and cash equivalents of $5.1M, working capital $14.6M, current ratio ~1.8x, and net debt reduced by $4.8M YoY (and down $744k vs Q4 2025). Management renegotiated the revolver with improved terms to lower interest expense.
Operational Resilience and Supply Chain Diversification
Company reports diversified supply base (domestic and international) and supplier transitions to reduce single-source dependency, enabling capital-light scaling without material incremental overhead or CapEx.
Negative Updates
Flat Year-over-Year Revenue and Seasonal Softness
Revenue was essentially flat YoY ($19.0M vs $19.2M) and declined 16% sequentially due to typical Q1 seasonality; last year's Q1 benefited from a one-off large project that did not recur.
Consolidated Net Loss Still Present
Despite improvements, GAAP consolidated net loss of $50k remained for the quarter (although materially improved from a $245k loss in prior-year Q1).
Adjusted EBITDA Below Corporate Target
Adjusted EBITDA margin was 5.6% of sales in Q1 versus the company’s target of 10%+, indicating continued work required to reach long-term margin goals.
Backlog Volatility and Timing Risk
Management emphasized backlog is a snapshot that can swing significantly between reporting periods and may not reliably predict near-term sales; several opportunities can be timing-dependent.
Timing Delays in Integrated Systems
Some integrated systems opportunities are taking longer to close, with the company relying on strength in custom cabling and other segments to offset these timing delays.
Working Capital Usage and Revolver Borrowing
Company had $7.1M drawn on its revolving credit facility as of Jan 31, indicating working capital utilization despite overall net debt improvement; continued management of working capital remains important.
Company Guidance
Management guided that fiscal 2026 should accelerate versus the seasonally soft Q1—pointing to a strengthened backlog (current $18.6M, up from $12.4M mid‑January and $14.4M as of 1/31 on bookings of $17.9M) and diversified demand across small cell, DAC and custom cabling—and said they expect revenue growth to pick up in Q2 and accelerate into the back half of the year; they signaled gross margin durability above ~30% (Q1 gross margin 32.3%, +250 bps YoY), continued operating‑leverage improvements (Q1 operating income $177k vs $56k), and improving profitability (Q1 adjusted EBITDA ~$1.1M, 5.6% of sales, up 22% YoY; non‑GAAP net income $659k, $0.06/share; consolidated net loss $50k), with a target to reach adjusted EBITDA of 10%+ of sales, ongoing free‑cash‑flow improvement, further net‑debt reduction (net debt down $4.8M YoY; down $744k QoQ), and maintained balance‑sheet flexibility (cash $5.1M, working capital $14.6M, current ratio ~1.8, current assets $33M vs liabilities $18.4M, inventory ~$13.8M, $7.1M drawn on the revolver); they also highlighted DAC performance (up to 75% energy savings) as a meaningful growth driver.RF Industries Financial Statement Overview
Summary
Mixed fundamentals: Income Statement reflects a sharp TTM revenue decline (-28.7%) and very thin profitability (net margin ~0.3%), Balance Sheet is improving with moderate and declining leverage (~0.71x debt/equity) but low ROE (~0.8%), and Cash Flow is a bright spot with solid TTM operating cash flow (~$4.8M) and free cash flow (~$4.4M) that exceed reported earnings.Income Statement
TTM (Trailing-Twelve-Months) shows a sharp revenue decline (-28.7%) but a return to modest profitability (gross margin ~32%, EBIT margin ~1.3%, net margin ~0.3%). Annual results were highly volatile: strong profitability in 2021, followed by losses in 2023–2024, and then near-breakeven profits in 2025 and TTM. Strength is the clear recovery in margins versus the loss years; weakness is the very thin current net profit and recent negative growth, which leaves earnings quality sensitive to small operating swings.47
Neutral
Balance Sheet
Leverage is moderate with debt running ~0.71x equity in TTM (down from ~0.84–0.87x in 2023–2024), indicating improving balance-sheet risk. Equity is stable (mid-$30M range), but profitability on that equity remains low in TTM (ROE ~0.8%) after negative ROE in 2023–2024. Overall, the balance sheet looks more stable than during the downturn, yet still constrained by weak returns.58
Neutral
Cash Flow
Cash generation is a relative bright spot: TTM operating cash flow (~$4.8M) and free cash flow (~$4.4M) are solid and free cash flow growth is strong versus the prior period. Free cash flow is meaningfully larger than reported earnings in recent periods, suggesting cash conversion is currently healthy despite thin net income. The main weakness is that operating cash flow remains modest relative to sales (coverage ratio ~0.26), so sustained improvement depends on keeping working-capital and margins disciplined.70
Positive
| Breakdown | TTM | Oct 2025 | Oct 2024 | Oct 2023 | Oct 2022 | Oct 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 80.36M | 80.59M | 64.86M | 72.17M | 85.25M | 57.42M |
| Gross Profit | 25.70M | 24.80M | 16.09M | 16.39M | 21.64M | 16.29M |
| EBITDA | 3.66M | 3.28M | -1.27M | -1.82M | 3.28M | 7.99M |
| Net Income | 270.00K | 75.00K | -6.60M | -3.08M | 1.45M | 6.18M |
Balance Sheet | ||||||
| Total Assets | 70.33M | 77.10M | 71.05M | 87.23M | 93.07M | 50.60M |
| Cash, Cash Equivalents and Short-Term Investments | 5.11M | 5.08M | 839.00K | 4.90M | 4.53M | 13.05M |
| Total Debt | 25.36M | 26.59M | 28.73M | 34.74M | 32.47M | 1.51M |
| Total Liabilities | 34.79M | 41.90M | 36.98M | 47.47M | 51.20M | 11.00M |
| Stockholders Equity | 35.55M | 35.20M | 34.07M | 39.76M | 41.87M | 39.60M |
Cash Flow | ||||||
| Free Cash Flow | 4.42M | 4.34M | 2.43M | 1.70M | 217.00K | -3.35M |
| Operating Cash Flow | 4.84M | 4.58M | 3.17M | 4.18M | 2.89M | -3.12M |
| Investing Cash Flow | -414.00K | -223.00K | -738.00K | -2.48M | -27.12M | -227.00K |
| Financing Cash Flow | -596.00K | -116.00K | -6.49M | -1.34M | 15.70M | 605.00K |
RF Industries Technical Analysis
Neutral
10.52
Price Trends
10.52
Positive
8.44
Positive
7.78
Positive
Market Momentum
0.14
Positive
48.26
Neutral
23.82
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RFIL, the sentiment is Neutral. The current price of 10.52 is below the 20-day moving average (MA) of 11.21, above the 50-day MA of 10.52, and above the 200-day MA of 7.78, indicating a neutral trend. The MACD of 0.14 indicates Positive momentum. The RSI at 48.26 is Neutral, neither overbought nor oversold. The STOCH value of 23.82 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for RFIL.
RF Industries Risk Analysis
RF Industries disclosed 29 risk factors in its most recent earnings report. RF Industries 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
RF Industries Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | $162.03M | 11.56 | 19.09% | 3.00% | 4.90% | 31.13% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
60 Neutral | $113.77M | -523.92 | 0.77% | ― | 24.25% | ― | |
58 Neutral | $109.05M | -16.14 | -4.35% | ― | 12.94% | -81.09% | |
48 Neutral | $74.92M | 7.57 | -5.40% | ― | -22.02% | -156.65% | |
46 Neutral | $25.39M | 10.40 | 365.40% | ― | 2.14% | 5.01% | |
42 Neutral | $25.00M | -52.08 | 9999.00% | ― | 18.24% | 24.49% |
* Industrials Sector Average
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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.