Breaking Down Frequency Electronics, Inc. (FEIM) Financial Health: Key Insights for Investors

Are you keeping a close watch on Frequency Electronics, Inc. (FEIM) and trying to gauge its financial stability? Did you know that in fiscal year 2024, the company reported a significant 36% increase in revenue, reaching $55.3 million, compared to $40.8 million in fiscal year 2023? Furthermore, operating income dramatically improved to $5.0 million, a stark contrast to the $4.7 million operating loss in the previous year. With a backlog of $78 million at the end of fiscal year 2024, what does this mean for future growth and profitability? Let’s delve into the key financial insights that can help you make informed decisions.

Frequency Electronics, Inc. (FEIM) Revenue Analysis

Understanding Frequency Electronics, Inc.'s (FEIM) revenue streams involves analyzing its primary revenue sources, year-over-year growth, and the contribution of different business segments. In the fiscal year ending April 30, 2024, FEIM reported annual revenue of $55.27 million, marking a substantial 35.55% growth rate. The company's latest twelve months revenue is $65.401 million.

For the three months ended January 31, 2025, Frequency Electronics Inc. reported revenues of $18.9 million, a 38.0% increase from the same period in 2024. This growth was primarily driven by higher sales to U.S. Government space customers.

FEIM operates primarily through two reportable segments:

• FEI-NY: This segment includes precision time and frequency control products. For the three months ended January 31, 2025, it accounted for 76.4% of revenues. For the nine months ended January 31, 2025, it contributed 74.2% of revenues.
• FEI-Zyfer: Focusing on GPS technologies and secure communications, this segment contributed 26.6% and 27.8% of revenues for the same three- and nine-month periods, respectively.

A significant portion of FEIM's revenue comes from sales to U.S. Government space customers. For the quarter ended January 31, 2025, there was an increase in sales to these customers by approximately $4.4 million, and to Government non-space customers by approximately $1.4 million.

Satellite payloads are a significant driver of revenue. They represented 59% of Q3 revenue, amounting to $11.2 million. This reflects a 65% increase from $6.8 million in the previous year. Defense-related revenues also remained solid at $7.4 million, contributing to the overall revenue growth.

FEIM's strong financial health is also indicated by a robust backlog. As of January 31, 2025, the company's consolidated funded backlog was approximately $73 million, with about 65% expected to be realized in the next twelve months.

Here's an overview of Frequency Electronics' revenue performance in recent years:

For more insights into Frequency Electronics, Inc.'s mission, vision, and core values, you can explore: Mission Statement, Vision, & Core Values of Frequency Electronics, Inc. (FEIM).

Frequency Electronics, Inc. (FEIM) Profitability Metrics

Analyzing the profitability of Frequency Electronics, Inc. (FEIM) involves examining its gross profit, operating profit, and net profit margins to understand its financial health and operational efficiency. Trends in these metrics over time provide insights into the company's ability to manage costs and generate profits.

For the fiscal year 2024, Frequency Electronics, Inc. reported:

• Gross Profit: $19.5 million
• Operating Income: $4.2 million
• Net Income: $3.3 million

Frequency Electronics, Inc.'s financial performance for fiscal year 2024 shows a mixed picture in terms of profitability. The gross profit margin stands at 37.6%, indicating a solid ability to manage the cost of goods sold relative to sales. However, the operating profit margin is considerably lower at 8.1%, reflecting the impact of operating expenses on the company's earnings. The net profit margin is at 6.4%, which suggests further reduction in profitability due to other expenses such as interest and taxes.

A closer look at Frequency Electronics, Inc.'s financials reveals key aspects of its operational efficiency. The gross margin of 37.6% demonstrates the company's effectiveness in controlling production costs and pricing its products or services. However, the operating margin of 8.1% suggests that the company faces challenges in managing its operating expenses, which include administrative and sales costs. The net profit margin of 6.4% indicates that Frequency Electronics, Inc. retains a relatively small portion of its revenue as net income after all expenses and obligations are met.

Detailed profitability metrics for Frequency Electronics, Inc. (FEIM) can be summarized as follows:

Further insights into Frequency Electronics, Inc.'s investor profile can be found at: Exploring Frequency Electronics, Inc. (FEIM) Investor Profile: Who’s Buying and Why?

Frequency Electronics, Inc. (FEIM) Debt vs. Equity Structure

Understanding Frequency Electronics, Inc.'s financial health requires a close look at how the company manages its debt and equity. This balance is crucial for funding growth and maintaining stability. Here’s a breakdown of FEIM's debt levels, ratios, and financing strategies based on the latest available data.

As of the second quarter of fiscal year 2024, Frequency Electronics, Inc. reported total liabilities of $14.98 million. This figure encompasses both short-term and long-term obligations, reflecting the company's commitments to creditors and other financial responsibilities.

Here's a closer look at the components of Frequency Electronics' debt:

• Short-Term Debt: This includes obligations due within one year, such as accounts payable and accrued expenses.
• Long-Term Debt: This covers liabilities extending beyond one year, which may include bank loans, bonds, or other financing arrangements.

Analyzing the relationship between debt and equity provides insights into FEIM's financial leverage. The debt-to-equity ratio is a key metric for assessing this balance. While the specific debt-to-equity ratio for the second quarter of fiscal year 2024 is not explicitly mentioned, understanding this ratio in comparison to industry standards is vital.

Generally, a lower debt-to-equity ratio indicates a more conservative financing approach, relying more on equity than debt. Conversely, a higher ratio suggests greater financial leverage, which can amplify both profits and risks. It's important to compare FEIM's ratio with industry averages to determine whether the company's leverage is within a reasonable range.

Below is a table summarizing Frequency Electronics, Inc.'s Balance Sheet data as of February 29, 2024 (in thousands):

Monitoring any recent debt issuances, credit ratings, or refinancing activities is also important. These events can significantly impact FEIM's financial flexibility and cost of capital. For instance, a favorable credit rating can lower borrowing costs, while successful refinancing can extend debt maturities and improve cash flow.

Frequency Electronics, Inc. strategically balances debt financing and equity funding to support its operations and growth initiatives. While debt can provide necessary capital for expansion and investments, equity helps maintain a healthy capital structure and reduces financial risk. The company's approach to this balance reflects its overall financial strategy and risk tolerance.

To further explore Frequency Electronics, Inc.'s financial health, check out: Breaking Down Frequency Electronics, Inc. (FEIM) Financial Health: Key Insights for Investors

Frequency Electronics, Inc. (FEIM) Liquidity and Solvency

Analyzing Frequency Electronics, Inc.'s (FEIM) financial health requires a close look at its liquidity and solvency. These metrics provide insights into the company's ability to meet its short-term obligations and long-term financial stability. Let's examine key liquidity ratios, working capital trends, and cash flow dynamics to assess FEIM's financial standing.

Assessing Frequency Electronics, Inc.'s (FEIM) Liquidity:

Liquidity ratios offer a snapshot of a company's capacity to cover its immediate liabilities with its current assets. Two critical ratios in this assessment are the current ratio and the quick ratio.

• Current Ratio: The current ratio is calculated by dividing current assets by current liabilities. A higher current ratio generally indicates better liquidity.
• Quick Ratio: The quick ratio, also known as the acid-test ratio, excludes inventories from current assets, providing a more conservative measure of liquidity. This is because inventories may not be easily converted into cash.

Analysis of working capital trends is also vital. Working capital, calculated as current assets minus current liabilities, reflects the company's operational liquidity. Monitoring changes in working capital over time can reveal whether the company's short-term financial health is improving or deteriorating.

An overview of Frequency Electronics, Inc.'s (FEIM) cash flow statements provides deeper insights into its liquidity. Cash flow is typically categorized into three main activities:

• Operating Activities: This reflects the cash generated or used from the company's core business operations.
• Investing Activities: This includes cash flow related to the purchase or sale of long-term assets, such as property, plant, and equipment (PP&E).
• Financing Activities: This involves cash flow from activities such as borrowing, issuing stock, and paying dividends.

By examining the trends in these cash flow categories, investors can gain a comprehensive understanding of how Frequency Electronics, Inc. (FEIM) manages its cash and its implications for liquidity. A company with strong positive cash flow from operating activities is generally better positioned to meet its short-term obligations.

Potential liquidity concerns may arise if Frequency Electronics, Inc. (FEIM) exhibits:

• Declining current and quick ratios.
• Negative trends in working capital.
• Negative cash flow from operating activities.

Conversely, Frequency Electronics, Inc. (FEIM) may demonstrate liquidity strengths through:

• Increasing current and quick ratios.
• Positive working capital trends.
• Strong positive cash flow from operating activities.

For more insights into Frequency Electronics, Inc. (FEIM) and its investors, consider reading: Exploring Frequency Electronics, Inc. (FEIM) Investor Profile: Who’s Buying and Why?

Frequency Electronics, Inc. (FEIM) Valuation Analysis

Determining whether Frequency Electronics, Inc. (FEIM) is overvalued or undervalued requires a multifaceted approach, incorporating key financial ratios, stock performance analysis, and analyst sentiment. These elements, when assessed together, provide a comprehensive view of the company's valuation.

To assess FEIM's valuation, consider the following metrics:

• Price-to-Earnings (P/E) Ratio: This ratio compares the company's stock price to its earnings per share. A higher P/E ratio might suggest overvaluation, while a lower one could indicate undervaluation, relative to industry peers and historical averages.
• Price-to-Book (P/B) Ratio: The P/B ratio compares a company's market capitalization to its book value of equity. It can help identify whether the stock price is reasonable compared to the company's net asset value.
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: This ratio compares a company's enterprise value (total market value plus debt, minus cash) to its earnings before interest, taxes, depreciation, and amortization (EBITDA). It's often used to assess valuation, especially when comparing companies with different capital structures.

Analyzing Frequency Electronics, Inc. (FEIM)'s stock price trends over the past year or longer provides insights into market sentiment and investor confidence. Here's what to look for:

• Stock Price Trends: Observing the stock's performance over the last 12 months helps to understand its volatility and overall direction. Upward trends may reflect positive market sentiment, while downward trends could indicate concerns about the company's performance or industry outlook.

For Frequency Electronics, Inc. (FEIM), dividend yield and payout ratios may offer additional insights, if applicable:

• Dividend Yield: The dividend yield is the annual dividend payment divided by the stock price, expressed as a percentage. It indicates the return on investment from dividends alone.
• Payout Ratios: The payout ratio is the percentage of earnings paid out as dividends. A high payout ratio may not be sustainable if the company's earnings decline.

Finally, consider the consensus of financial analysts regarding Frequency Electronics, Inc. (FEIM)'s stock valuation:

• Analyst Consensus: Check whether analysts recommend a 'buy,' 'hold,' or 'sell' for the stock. Their collective opinion can influence investor perception and stock performance.

By evaluating these factors, investors can gain a more informed perspective on whether Frequency Electronics, Inc. (FEIM) is currently overvalued, undervalued, or fairly priced in the market.

Here is a comprehensive table to illustrate key valuation considerations:

For more insights, check out: Breaking Down Frequency Electronics, Inc. (FEIM) Financial Health: Key Insights for Investors

Frequency Electronics, Inc. (FEIM) Risk Factors

Frequency Electronics, Inc. (FEIM) faces a variety of internal and external risks that could significantly impact its financial health. These risks span industry competition, regulatory changes, market conditions, and specific operational and strategic challenges detailed in their filings.

Key risks impacting Frequency Electronics, Inc. (FEIM) include:

• Industry Competition: The aerospace and defense industries are highly competitive.
• Regulatory Changes: Changes in government regulations, particularly those affecting the aerospace and defense sectors, can create both opportunities and challenges for Frequency Electronics, Inc. (FEIM). Compliance with these regulations requires ongoing investment and adaptation, and failure to comply can result in penalties or loss of contracts.
• Market Conditions: Economic downturns or shifts in government spending priorities can significantly impact the demand for Frequency Electronics, Inc.'s (FEIM) products and services.

Operational, financial, and strategic risks highlighted in recent earnings reports or filings include:

• Dependence on Government Contracts: A significant portion of Frequency Electronics, Inc.’s (FEIM) revenue comes from contracts with governmental entities. Any disruption or cancellation of these contracts could adversely affect the company’s financial performance.
• Technological Obsolescence: The technology sector is characterized by rapid advancements. Frequency Electronics, Inc. (FEIM) must continually innovate and adapt to remain competitive.
• Supply Chain Disruptions: Disruptions in the supply chain, whether due to geopolitical events, natural disasters, or other factors, can impact Frequency Electronics, Inc.’s (FEIM) ability to fulfill orders and maintain production schedules.

Mitigation strategies or plans (if available):

While specific mitigation strategies may vary depending on the nature and severity of the risk, Frequency Electronics, Inc. (FEIM) typically employs several common risk management techniques:

• Diversification: Frequency Electronics, Inc. (FEIM) seeks to diversify its customer base and product offerings to reduce reliance on any single market or customer.
• Continuous Monitoring: Continuous monitoring of market trends, regulatory changes, and competitive landscape is essential for Frequency Electronics, Inc. (FEIM) to identify and respond to emerging risks promptly.
• Financial Planning: Prudent financial planning and risk management practices, including maintaining adequate liquidity and insurance coverage, help Frequency Electronics, Inc. (FEIM) mitigate the financial impact of unexpected events.

Explore more about Frequency Electronics, Inc. (FEIM) Investor Profile here: Exploring Frequency Electronics, Inc. (FEIM) Investor Profile: Who’s Buying and Why?

Frequency Electronics, Inc. (FEIM) Growth Opportunities

Frequency Electronics, Inc. (FEIM) faces a landscape ripe with opportunities, stemming from strategic initiatives and market positioning. An analysis of their growth drivers, potential revenue increases, and competitive advantages provides a clearer picture of their future trajectory. For further insights, see: Breaking Down Frequency Electronics, Inc. (FEIM) Financial Health: Key Insights for Investors.

Key growth drivers for Frequency Electronics, Inc. (FEIM) include:

• Product Innovations: Developing cutting-edge solutions for precise timing and frequency control.
• Market Expansions: Targeting growth in the space, defense, and telecommunications sectors.
• Strategic Acquisitions: Expanding capabilities and market reach through targeted acquisitions.

Future revenue growth projections and earnings estimates reveal potential financial upswings. Consider the factors influencing these projections:

• Increased Demand: Rising demand for high-performance timing solutions in 5G infrastructure and satellite communications.
• Contract Wins: Securing new contracts and expanding existing relationships with key customers.
• Technological Advancements: Leveraging advancements in atomic clock technology and frequency synthesis.

Strategic initiatives and partnerships poised to drive future growth include:

• Collaborations: Partnering with leading technology companies to integrate FEIM's solutions into broader systems.
• Research & Development: Investing in R&D to maintain a competitive edge in product performance and innovation.
• Government Contracts: Pursuing government contracts for defense and aerospace applications.

Frequency Electronics, Inc. (FEIM) possesses several competitive advantages that position the company for sustained growth:

• Technical Expertise: Deep domain knowledge in precision timing and frequency control.
• Reputation: A strong reputation for reliability and performance in critical applications.
• Custom Solutions: Ability to provide tailored solutions to meet specific customer requirements.

To illustrate potential revenue growth, consider a hypothetical scenario based on market trends and company strategies. Please note that these values are illustrative and not based on official company forecasts.

These projections are influenced by factors such as contract acquisitions, technological advancements, and expansion into new markets. Monitoring these elements will be crucial for assessing Frequency Electronics, Inc.'s (FEIM) growth trajectory.