Breaking Down CPS Technologies Corporation (CPSH) Financial Health: Key Insights for Investors

You've seen the headlines about CPS Technologies Corporation (CPSH) posting record numbers, but the market reaction was complicated, so you need a clear breakdown of what's actually driving the stock right now. The company just delivered a massive Q3 2025, with revenue soaring to a record $8.8 million, more than doubling the prior-year period, and turning a loss into a net income of $0.2 million (or $0.01 diluted earnings per share). That's a real turnaround, plus they secured a $15.5 million follow-on contract with a major semiconductor manufacturer, which provides solid near-term visibility. Still, the stock price dropped post-earnings, suggesting investors are weighing that explosive growth against the capital raise that netted $9.5 million and the mixed forward guidance that hints at a projected EPS loss for fiscal year 2026. We need to look past the noise and see if the underlying business-the new 17.1% gross margin and the defense contracts-can sustain this momentum into the next cycle.

Revenue Analysis

CPS Technologies Corporation (CPSH) is in a strong revenue acceleration phase, with year-to-date (YTD) sales through the third quarter of fiscal 2025 hitting $24.4 million, marking a significant shift in its financial trajectory. This performance puts the company on track for its best revenue year ever, driven by core product demand and operational efficiency gains.

The core of CPS Technologies Corporation's revenue comes from its advanced material solutions, specifically its Metal Matrix Composites (MMCs) like Aluminum Silicon Carbide (AlSiC) and its hermetic packaging products. These are critical components used across diverse, high-growth sectors.

• AlSiC components: Used in power modules for electric trains, wind turbines, and hybrid vehicles.
• Hermetic Packaging: Essential for radar, satellite, avionics, and 5G infrastructure.
• Government Contracts: Includes Small Business Innovation Research (SBIR) awards for defense applications, like a Phase II, $1.15 million contract with the U.S. Army for advanced tungsten warhead development.

The year-over-year revenue growth rate in 2025 shows a dramatic positive trend, reflecting a successful internal turnaround and strong market demand. Honestly, the Q3 jump is the kind of number you rarely see.

The most significant change in the revenue stream is the complete replacement of the former HybridTech Armor business, which contributed $2.8 million in Q1 2024 but zero revenue in Q1 2025. This substantial loss was not only offset but surpassed by the growth in core AlSiC and hermetic packaging, which shows the underlying strength of the company's non-defense commercial and government product lines. This growth is further secured by a $15.5 million 12-month follow-on contract with a major multinational semiconductor manufacturer for advanced power module components, which began on October 1, 2025.

What this estimate hides is the execution risk associated with the capacity expansion, funded by the $9.5 million in net proceeds from the October 2025 public offering. The revenue growth is tied directly to the successful ramp-up of production in the new, larger facility. To be fair, the strong demand is there, but the operational challenge is now to defintely convert that demand into shipped product and revenue over the next 12 months. For a deeper look at the risks and opportunities, check out our full analysis: Breaking Down CPS Technologies Corporation (CPSH) Financial Health: Key Insights for Investors.

Next Step: Portfolio Managers should model the Q4 2025 revenue based on the Q3 run rate plus a partial contribution from the new $15.5 million contract, and then project the full impact for 2026.

Profitability Metrics

You need to know if CPS Technologies Corporation (CPSH) has finally turned the corner on profitability, and the short answer is yes-but it's a qualified yes. The company has successfully shifted from significant losses to positive net income in 2025, but its margins still trail the broader manufacturing sector. This is a story of operational turnaround, not yet industry-leading efficiency.

For the third quarter of fiscal 2025, CPS Technologies Corporation reported a strong return to the black, driven by record sales of $8.8 million. Here's the quick math on the core profitability ratios for Q3 2025:

• Gross Profit Margin: 17.1% ($1.5 million Gross Profit on $8.8 million in revenue).
• Operating Profit Margin: Approximately 3.4% ($0.3 million Operating Profit on $8.8 million in revenue).
• Net Profit Margin: Approximately 2.3% ($0.2 million Net Income on $8.8 million in revenue).

The jump in gross margin is the most important number right now. It shows the core business of producing high-performance materials is finally covering its direct costs and then some. This is defintely a major win for the management team.

Operational Efficiency and Margin Trends

The trend over 2025 shows a clear, positive trajectory in operational efficiency. The company's Gross Margin has steadily expanded, reflecting higher production rates and what management calls 'greater production efficiencies.' This is a textbook example of operating leverage kicking in as revenue scales.

Here's how the gross margin trended through the 2025 fiscal year:

The Q3 2025 Gross Margin of 17.1% is a dramatic turnaround from the gross loss of (12.3%) reported in the prior-year period (Q3 2024). Also, the operating profit of $0.3 million is a significant reversal from the ($1.5 million) operating loss a year ago. This turnaround is largely due to increased sales volume for their core product lines, which helps spread fixed manufacturing costs over a larger base.

Comparison with Industry Benchmarks

When you look at the industry, CPS Technologies Corporation's margins suggest they are still a smaller, niche manufacturer in a capital-intensive space. The company's Q3 2025 Gross Margin of 17.1% is stronger than the 14.9% average for the Chemicals industry, which is a somewhat related materials sector. But, to be fair, it sits well below the broader Manufacturing benchmark, which typically targets a Gross Margin between 25% and 35%. The net profit margin of roughly 2.3% is also lower than the 5.4% average seen in the Building Products & Equipment sector.

What this estimate hides is the high-value, mission-critical nature of CPS Technologies Corporation's products, which include components for aerospace, defense, and power modules. The lower margins could reflect the high cost of specialized raw materials and the complexity of their unique metal matrix composite (MMC) technology, which is an advanced materials solution. The key action now is watching if the new $15.5 million follow-on contract and the move to a larger facility, financed by the $9.5 million public offering, can push that gross margin closer to the 25% manufacturing floor. For a deeper dive, read the full post: Breaking Down CPS Technologies Corporation (CPSH) Financial Health: Key Insights for Investors.

Debt vs. Equity Structure

You want to know how CPS Technologies Corporation (CPSH) is funding its current growth spurt, and the answer is clear: the company is overwhelmingly relying on equity, not debt. This is a very low-risk capital structure, especially for a manufacturer in an expansion phase. As of the third fiscal quarter ended September 27, 2025, the company's total debt is minimal, standing at just $370.00K.

This tiny debt load is mostly composed of non-traditional debt like lease obligations, not bank loans or corporate bonds. Specifically, the long-term lease liability on the balance sheet is $209,000. This means the company is essentially debt-free in the conventional sense, giving it immense financial flexibility. That's a strong position to be in.

Here's the quick math on their leverage, comparing it to the industry standard:

• CPS Technologies Corporation's Total Debt (MRQ): $370.00K
• Total Stockholders' Equity (Q3 2025): $15,132,448
• Calculated Debt-to-Equity (D/E) Ratio: 2.45%

The Debt-to-Equity ratio is a key measure of financial leverage, showing how much debt a company uses to finance its assets relative to the value of shareholders' equity. For a company operating in the advanced materials space, which serves sectors like Aerospace & Defense, the industry average D/E ratio is around 0.38 (or 38%). CPS Technologies Corporation's ratio of just 2.45% is extremely low, signaling a defintely conservative approach to financing. This low leverage cuts interest expense risk to near zero, which is a huge plus in a high-rate environment.

The company's recent financing activity confirms this equity-first strategy. On October 8, 2025, CPS Technologies Corporation closed a public offering of common stock, securing gross proceeds of $10.35 million. The net proceeds, reported to be around $9.5 million, are earmarked for general corporate purposes, including working capital, capital expenditures, and even the potential repayment or refinancing of existing debt. They are using fresh equity capital to fund expansion and operational needs, not new debt.

While CPS Technologies Corporation doesn't have a formal credit rating from a major agency like Moody's, the market's perception is strong. On November 13, 2025, Roth/MKM initiated coverage with a 'Buy' rating. This positive analyst coverage, coming right before your investment decision, acts as a solid proxy for a favorable financial outlook, suggesting the market sees the low-debt model as a strength. For a deeper dive into the company's performance, you should check out the full analysis in Breaking Down CPS Technologies Corporation (CPSH) Financial Health: Key Insights for Investors.

Liquidity and Solvency

You're looking for a clear picture of whether CPS Technologies Corporation (CPSH) can cover its near-term obligations, and the data from the most recent quarter (MRQ) is defintely encouraging. The company's liquidity position is strong, but you still need to look past the balance sheet ratios to the underlying cash flow dynamics.

As of the most recent reporting period, the company's Current Ratio sits at a robust 3.12. This means for every dollar of short-term debt (current liabilities), CPS Technologies Corporation (CPSH) has $3.12 in current assets to cover it. Even better, the Quick Ratio (acid-test ratio), which strips out less-liquid inventory, is a solid 1.99. This signals that the company can meet almost two dollars of immediate obligations with its most liquid assets-cash, marketable securities, and accounts receivable-without having to sell inventory.

Here's the quick math on working capital: the increase in sales that drove the record quarterly revenue of $8.8 million in Q3 2025 has also naturally expanded the working capital components. For example, Accounts Receivable grew to $6.3 million in Q1 2025, up from $4.9 million at the start of the fiscal year, and Inventories also grew. This is a common and healthy trend when a business is ramping up production to fulfill a growing order book, but it means cash is temporarily tied up in the business cycle.

The cash flow statement overview, however, provides a necessary caveat. Over the trailing twelve months (TTM) ending September 27, 2025, Cash from Operations (CFO) was actually negative $0.92 million. This is the core risk: the business's day-to-day operations are not yet generating positive cash flow to fund themselves, despite the return to net profitability in Q3 2025.

The company is investing in its future, which shows up in the negative TTM Cash from Investing (CFI) of approximately $0.60 million. This is likely capital expenditure (CapEx) to support the increased production capacity needed for new contracts, like the $15.5 million follow-on contract for advanced power module components.

The biggest near-term liquidity strength is the recent financing activity. Just after the third quarter ended, CPS Technologies Corporation (CPSH) completed a public offering, raising net proceeds of $9.5 million. This cash injection dramatically shores up the balance sheet and provides the capital necessary for the planned move to a larger manufacturing facility in 2026.

What this estimate hides is the reliance on external capital to bridge the gap until the core business's operating cash flow turns consistently positive. The strong ratios are a good sign of short-term stability, but the $9.5 million is the crucial fuel for the growth strategy, including the expansion outlined in the Mission Statement, Vision, & Core Values of CPS Technologies Corporation (CPSH).

The company has bought itself significant runway with the capital raise, but the next action for you is to monitor the Q4 2025 and Q1 2026 reports for a sustained positive trend in Cash from Operations. If that TTM number doesn't move toward zero or positive, the recent capital will start to burn faster than expected.

Valuation Analysis

You're asking if CPS Technologies Corporation (CPSH) is overvalued or undervalued, and the simple answer is that its valuation metrics are screaming growth potential, but only if you accept the significant risk of an unprofitable company. The consensus from analysts points to a strong upside, but the negative earnings ratios flag a company still in a turnaround phase.

As of late November 2025, the stock is trading around $3.09, which is a big move from its 52-week low of $1.39, but still well below the 52-week high of $4.89.

Here's the quick math on the key valuation ratios for CPS Technologies Corporation (CPSH):

• Price-to-Earnings (P/E) Ratio: The trailing twelve months (TTM) P/E ratio is a negative figure, around -81.77 (as of November 7, 2025). This negative number is a clear sign that the company is currently unprofitable, so the P/E ratio is not a useful tool for a direct valuation comparison right now.
• Price-to-Book (P/B) Ratio: The P/B ratio stands at approximately 1.62. This means investors are paying $1.62 for every dollar of the company's book value (assets minus liabilities), which is a reasonable level that doesn't suggest extreme overvaluation.
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: This metric is also negative, around -24.0x for the last twelve months, which is a direct consequence of the company's negative earnings before interest, taxes, depreciation, and amortization (EBITDA). When both P/E and EV/EBITDA are negative, you defintely need to focus more on revenue growth and the P/B ratio.

What this estimate hides is the market's expectation for a swing to profitability, which is why the stock price has seen such volatility. The 12-month trend shows a significant run-up from the low of $1.39, indicating investor optimism has returned, but the recent price of $3.09 is a pullback from the high of $4.89, suggesting caution is warranted.

Analyst Consensus and Forward View

The Wall Street consensus is currently split but leans toward a positive outlook. The average rating is a Moderate Buy or Hold, with a consensus price target of $6.00. This target represents a massive potential upside of over 89% from the current trading price of around $3.16 (depending on the exact day you check). To be fair, this is a small-cap stock, and a single analyst upgrade, like the recent one to a 'Strong-Buy' from Roth Capital, can heavily skew the average. Still, the insider buying activity, with the CEO and a director purchasing over 70,166 shares recently, is a strong signal of internal confidence.

You won't find a dividend yield or payout ratio because CPS Technologies Corporation (CPSH) has no current dividend history, which is typical for a growth-focused company, or one focused on turning a profit. All earnings are being reinvested in the business, which is what you want to see if you are betting on a turnaround.

For a deeper dive into who is driving this volume, you should read Exploring CPS Technologies Corporation (CPSH) Investor Profile: Who's Buying and Why?

Next step: Use the Price-to-Sales (P/S) ratio (which is around 1.9x) as your primary valuation anchor, since the earnings-based multiples are unusable, and compare it against industry peers to finalize your buy/sell decision.

Risk Factors

You've seen the strong Q3 2025 numbers-revenue of $8.8 million, a return to profitability with $0.2 million in net income, and a solid $15.5 million contract win. But as a seasoned analyst, you know we need to map the risks that could derail this momentum.

The biggest near-term risk is external: the unpredictable nature of government funding and contracts. CPS Technologies Corporation (CPSH) relies on federal contracts and research awards, like the recent $1.15 million Small Business Technology Transfer (STTR) contract with the U.S. Army. A prolonged federal government shutdown, as discussed in the Q3 2025 earnings call, creates immediate uncertainty.

This uncertainty doesn't stop current work, but it can severely delay new business.

• Delaying new proposals and reviews.
• Slowing publication of future research topics.
• Impacting the flow of new contract awards.

This regulatory risk is a constant headwind, even as the company diversifies its commercial base into high-speed rail and energy/grid applications.

Operationally, the company faces two key challenges: managing growth and seasonal deceleration. The move to a new, larger manufacturing facility in 2026, financed in part by the $9.5 million net proceeds from the October 2025 public offering, is a critical long-term growth enabler. However, executing a facility move and production ramp-up without disrupting the supply chain or incurring significant non-recurring costs is a defintely a strategic risk.

Also, while Q3 2025 revenue was a record $8.8 million, management has tempered expectations for Q4 2025 due to seasonal factors.

• Holidays and planned plant shutdowns will likely prevent another revenue record in Q4.
• Increased inventory, which rose to $5.4 million by the end of Q3 2025 (up from $4.3 million at the start of the fiscal year), must be efficiently converted to sales to manage working capital.

Financially, despite the return to profitability, CPSH still grapples with valuation and liquidity risks. The company's Price-to-Earnings (P/E) ratio is still negative, and cash flow challenges remain a concern, according to recent analyst reports. Here's the quick math on the balance sheet shift from the start of the year to Q3 2025:

What this estimate hides is the reliance on the capital raise to fund expansion, which is a necessary step to mitigate the capacity constraint risk and meet the demand from the $15.5 million contract. The goal is to ensure the new facility and improved manufacturing efficiencies translate into sustained gross margin expansion beyond the Q3 2025 level of 17.1%. For a deeper dive into the company's long-term direction, you should review their Mission Statement, Vision, & Core Values of CPS Technologies Corporation (CPSH).

Growth Opportunities

You're looking for a clear map of where CPS Technologies Corporation (CPSH) is headed, and the path is defintely defined by their material science edge and a strategic pivot to high-growth sectors. The direct takeaway is this: the company is on track for its best revenue year ever in 2025, driven by core product demand in electrification and new defense/aerospace material commercialization.

Here's the quick math: through the first three quarters of fiscal 2025, CPS Technologies Corporation has already posted a cumulative revenue of $24.4 million, a significant jump that reflects three consecutive quarters of record sales. This strong performance is converting to the bottom line, with Q3 2025 reporting an operating profit of $0.3 million and net income of $0.2 million, or $0.01 per diluted share. They're finally restoring profitability after some one-time ramp-up costs.

The company's growth is fundamentally tied to its proprietary metal matrix composites (MMC), like AlSiC (Aluminum Silicon Carbide), which offer superior thermal management and lightweight strength. This is a crucial competitive advantage (a moat, really) in markets that are obsessed with efficiency and performance.

• Electrification: Core power module components are in high demand for electric vehicles, high-speed rail, and wind turbines.
• Defense/Aerospace: New revenue streams from the first commercial sales of radiation shielding and ongoing work on ballistic protection solutions.
• New Materials: Securing the first commercial order for AlMax™, a novel composite with properties better than aluminum.

Strategic Initiatives and Near-Term Revenue Drivers

The near-term revenue picture is clearer than what you see with most small-cap companies, thanks to a few concrete contracts and capital moves. The management team expects revenue to remain strong in the second half of 2025, with gross margins-which hit 17.1% in Q3 2025-to expand further as production efficiencies take hold.

The most tangible driver is a 12-month, $15.5 million follow-on contract with a major multinational semiconductor manufacturer, which started in October 2025. Plus, the company is actively using government-funded research, securing six program awards in 2025, including a Phase II, two-year, $1.15 million contract with the U.S. Army for advanced warhead development. That's smart, low-risk R&D funding.

To support this growth, CPS Technologies Corporation successfully closed a public offering in October 2025, raising net proceeds of $9.5 million. That capital is earmarked for general corporate purposes, including a planned move to a larger manufacturing facility in 2026, which will nearly double their usable space. They're raising money to expand capacity, not just to stay afloat.

The risk here is execution-can they staff and scale up production without new operational hiccups, like the one-time training costs that weighed on them in late 2024? Still, the market demand is clearly there, and the backlog is increasing. For a deeper dive into who is betting on this growth, you should check out Exploring CPS Technologies Corporation (CPSH) Investor Profile: Who's Buying and Why?