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

You're looking at Frequency Electronics, Inc. (FEIM) right now and the numbers from fiscal year 2025 are defintely eye-catching, but the near-term picture is more complex. The company delivered a blockbuster 2025, reporting full-year revenue of $69.8 million and net income that more than quadrupled to $23.8 million, translating to a strong $2.48 per diluted share, driven heavily by their satellite payloads business, which accounted for $40.9 million of revenue. But here's the quick math: the subsequent Q1 2026 results showed a dip, with revenue falling to $13.8 million, which suggests some revenue pull-forward from 2025, so we need to map that transition carefully. Still, the strong backlog of $71 million and a new $20 million share repurchase authorization signal management confidence, and analysts maintain a consensus Buy rating with an average 12-month price target of $43.00, indicating a potential 56.19% upside from the recent $27.53 stock price; we'll break down whether that target is realistic given the shift in earnings momentum.

Revenue Analysis

You need to know where Frequency Electronics, Inc. (FEIM)'s growth is truly coming from, and the takeaway is clear: the company's pivot to space is paying off in a huge way. The company delivered a full-year revenue of approximately $69.8 million for fiscal year 2025 (FY2025), a massive jump from the $55.3 million reported in FY2024.

This isn't just a slight bump; it's a structural shift. The year-over-year revenue growth rate hit an impressive 26.3%, driven almost entirely by their high-margin satellite programs. Honestly, that kind of top-line expansion is what you want to see in a specialized defense and space contractor, especially when the S&P 500's blended revenue growth rate for Q3 2025 was around 8.4%.

Primary Revenue Sources and Segment Contribution

Frequency Electronics, Inc. (FEIM) essentially operates in three distinct revenue buckets, but one is now dominating the picture: Satellite Payloads. This segment includes both commercial and U.S. Government satellite programs, where they provide precision time and frequency control products.

Here's the quick math on their FY2025 revenue mix, which ended April 30, 2025:

• Satellite Payloads: Contributed $40.9 million, or 59% of consolidated revenue.
• Non-space U.S. Government / DoD: Accounted for $26.5 million, or 38% of revenue.
• Other Commercial and Industrial Sales: Brought in a smaller $2.4 million, just 3% of the total.

The company's focus is defintely on the space segment, which is a high-barrier-to-entry market. You can dive deeper into the institutional interest in this area by Exploring Frequency Electronics, Inc. (FEIM) Investor Profile: Who's Buying and Why?

Analysis of Revenue Stream Changes

The most significant change in FY2025 was the dramatic shift in segment dominance. Satellite Payloads revenue surged by approximately 76% year-over-year, climbing from $23.2 million in FY2024 to $40.9 million in FY2025. This growth pushed the segment's contribution from 42% to 59% of total revenue.

To be fair, this massive growth was balanced by a decline in the non-space government business. Revenue from Non-space U.S. Government / DoD customers dropped from $29.0 million in FY2024 to $26.5 million in FY2025, causing its percentage of total revenue to fall from 52% to 38%. This suggests a successful internal reallocation of resources toward higher-growth, higher-margin space programs, which is a savvy strategic move.

Here is a quick comparison of the two main segments:

The key action for you is to monitor if the Satellite Payloads segment can sustain this incredible pace, especially since the CEO noted that some FY2025 revenue benefitted from strong execution that pulled forward some work originally scheduled for FY2026. That means near-term revenue volatility is a real risk, but the long-term trend is clearly upward.

Profitability Metrics

You want to know if Frequency Electronics, Inc. (FEIM) is a good bet, and the short answer is that their fiscal year (FY) 2025 performance shows a dramatic, but perhaps one-off, surge in profitability that blows past industry averages. The key takeaway is a massive jump in net income, largely due to a non-operational tax benefit, but even the core operational efficiency is significantly improved.

For the full fiscal year ended April 30, 2025, FEIM's revenue reached a record $69.8 million, up from $55.3 million in FY 2024. This growth translated into impressive margins across the board, which is exactly what we look for in a specialized electronics provider in the aerospace and defense (A&D) sector.

• Gross Profit Margin: 43.1%
• Operating Profit Margin: 16.8%
• Net Profit Margin: 34.1%

Here's the quick math: Gross Profit was $30.1 million on $69.8 million in revenue, yielding that 43.1% margin. Operating Income hit $11.7 million, for a 16.8% margin. Net Income was $23.8 million, which is how you get that eye-watering 34.1% net margin.

Trends in Profitability Over Time

The trend from FY 2024 to FY 2025 is what really grabs my attention. This wasn't just incremental growth; it was an inflection point. The company's operating income more than doubled, climbing from $5.0 million in FY 2024 to $11.7 million in FY 2025. That's a 134% increase in operating profit, which is defintely a tangible outcome of their efforts to complete complex programs and work more efficiently.

The Net Profit Margin saw an even more dramatic spike, jumping from 10.1% in FY 2024 to 34.1% in FY 2025. What this estimate hides, though, is that the massive net income of $23.8 million was significantly boosted by a discrete tax benefit from the release of a valuation allowance, not just core sales. So, while the net result is fantastic, the operational margin gives you a clearer view of the underlying business health.

FEIM vs. Industry Averages

When you compare FEIM to the broader Aerospace & Defense industry, their operational performance is clearly superior. The industry average Gross Profit Margin is around 28.8%, and the average Net Profit Margin is much lower at 5.7% as of November 2025.

FEIM's 43.1% Gross Margin suggests their specialized products-like the high-value satellite payloads which accounted for 59% of their FY 2025 revenue-command a premium and have a much better cost structure than the typical A&D company. This is a high-margin niche. For context, a major A&D peer's Space and Defense segment reported an adjusted operating margin of 15.1% for FY 2025, which is close to FEIM's 16.8% operating margin, showing FEIM is performing at the high end of the peer group, even without the tax benefit.

Analysis of Operational Efficiency

The operational efficiency gains are real and driven by execution. The Gross Margin for the first nine months of FY 2025 was 45%. This reflects a successful strategy to secure and deliver high-quality work, which is a sign of strong cost management and pricing power in their specialized markets. They are simply doing a better job of managing their cost of goods sold (COGS) relative to their price points.

The jump in Operating Income from $5.0 million to $11.7 million year-over-year confirms that the company is converting more of its revenue into profit before taxes and non-operating items. This is the core engine of the business, and it is firing on all cylinders, driven by backlog conversion and key program deliveries. The focus on satellite programs is paying off big time. You can read more about the full financial picture in our detailed post: Breaking Down Frequency Electronics, Inc. (FEIM) Financial Health: Key Insights for Investors.

Next step: Dig into the cash flow statement to see if this operational profitability is translating into sustainable cash generation.

Debt vs. Equity Structure

You want to know how Frequency Electronics, Inc. (FEIM) funds its operations and growth, and the answer is refreshingly simple: they don't use debt. This is a critical point for any investor. The company is fundamentally debt-free, meaning its capital structure is built entirely on shareholder equity and retained earnings, not borrowed money.

As of the most recent reporting for the first quarter of fiscal year 2026 (ended July 31, 2025), Frequency Electronics, Inc. reported zero debt on its balance sheet. This isn't just low debt; it's a complete absence of both short-term and long-term liabilities from borrowing. This financial discipline gives the company immense flexibility, especially when compared to its peers.

Here's the quick math on their leverage, or lack thereof:

• Total Debt (Long-Term & Short-Term): $0
• Stockholders' Equity (as of July 31, 2025): Approximately $56.3 million
• Debt-to-Equity Ratio: 0.00

A debt-to-equity (D/E) ratio measures how much a company's financing comes from debt versus shareholders' equity. A 0.00 ratio is a fortress balance sheet. For context, the average D/E ratio for the broader Aerospace & Defense industry is around 0.38 as of November 2025. This means the typical competitor has 38 cents of debt for every dollar of equity, but Frequency Electronics, Inc. carries none. They are not beholden to creditors, which is a massive risk mitigator in a cyclical industry.

So, how does Frequency Electronics, Inc. balance funding? The company relies on its strong internal cash generation and equity. Their focus is on funding growth from the inside, which is why you see capital allocation decisions like the new $20 million share repurchase authorization announced in September 2025. This is a clear signal that management sees its own stock as a better investment than expanding through debt, and it returns value directly to shareholders.

Their financial health is defintely a core strength, backed by full fiscal year 2025 revenue of $69.8 million and net income of $23.8 million. This performance allows them to maintain a capital structure that eliminates interest rate risk and the threat of debt covenants. This is a key insight into their strategic stability, which you can read more about in our full post: Breaking Down Frequency Electronics, Inc. (FEIM) Financial Health: Key Insights for Investors.

The company's financing strategy is simple: keep the powder dry and rely on profitability. This approach is rare in the high-capital defense sector and suggests a very conservative, risk-averse management team. Your next step should be to look at their cash position and working capital to see how that $0 debt translates into operational liquidity.

Liquidity and Solvency

You want to know if Frequency Electronics, Inc. (FEIM) has the cash to cover its near-term obligations, and honestly, the numbers point to a very healthy short-term position. Liquidity, which is the company's ability to pay its bills, is strong right now. This is defintely a core strength for the company.

The key indicators, the current and quick ratios, show a substantial buffer. As of the most recent quarter (Q1 FY2026, ended July 31, 2025), the current ratio sits at approximately 2.30. Here's the quick math: this means FEIM has $2.30 in current assets (cash, receivables, inventory) for every dollar of current liabilities (bills due within a year). A ratio over 2.0 is generally excellent, signaling a low risk of short-term default.

Also, the quick ratio (or acid-test ratio), which strips out inventory-the least liquid current asset-is around 1.21. This is still well above the comfortable 1.0 threshold, meaning the company can cover all its immediate obligations even if it sold zero new products. That's a great sign of operational flexibility. This strong position is also reflected in the working capital (current assets minus current liabilities), which was approximately $30 million as of July 31, 2025.

When we look at the cash flow statement, we see some important trends. While the full fiscal year 2025 (FY2025) saw net cash used in operating activities of approximately $1.4 million, the company quickly reversed that trend. The first quarter of fiscal year 2026 (Q1 FY2026) showed a positive shift, with net cash provided by operating activities of approximately $1.2 million.

This positive operating cash flow is crucial because it shows the core business is now generating cash, which is a much more sustainable source of liquidity than financing. The investing and financing activities also paint a clear picture:

• Operating Cash Flow: A recent positive turn, moving from a net use of $1.4 million in FY2025 to a net provision of $1.2 million in Q1 FY2026.
• Investing Cash Flow: The company is investing in its future, with capital expenditures around $2.26 million in the last twelve months, which is a normal use of cash for growth.
• Financing Cash Flow: The company is essentially debt-free, which eliminates a major financing risk. Plus, they've authorized a $20 million share repurchase program, a move that signals management's confidence in their long-term value and cash position.

The bottom line is that Frequency Electronics, Inc. (FEIM) has no immediate liquidity concerns. They are debt-free and hold a substantial cash buffer, which gives them a real competitive advantage. You can see how this financial stability supports their long-term strategy in their Mission Statement, Vision, & Core Values of Frequency Electronics, Inc. (FEIM).

Here is a snapshot of the key liquidity metrics:

What this estimate hides is the potential for large, lumpy contract payments which can temporarily skew quarterly cash flow figures, but the overall trend and the ratios are solid. Your next step should be to look at the quality of those current assets-specifically, how quickly they are converting accounts receivable to cash.

Valuation Analysis

You want to know if Frequency Electronics, Inc. (FEIM) is overvalued, undervalued, or priced just right. Honestly, the stock's valuation metrics suggest it's trading at a premium on some growth expectations, but its recent earnings performance makes the price-to-earnings (P/E) ratio look quite reasonable.

Here's the quick math on the core valuation multiples for the fiscal year (FY) 2025 data, with the stock price around the $27.53 mark in November 2025:

• Price-to-Earnings (P/E) Ratio: The trailing 12-month (TTM) P/E is sitting at 11.94x. This is based on the company's phenomenal FY 2025 diluted earnings per share (EPS) of $2.48. For a technology company, this P/E is defintely not stretched and looks quite attractive, especially considering the sector average is often much higher.
• Price-to-Book (P/B) Ratio: The P/B ratio as of April 2025 was 3.2x. This tells you the market is valuing the company at over three times its net tangible assets (book value), which stood at $55.736 million. It signals a premium for intangible assets like technology, backlog, and future growth potential.
• Enterprise Value-to-EBITDA (EV/EBITDA): The TTM EV/EBITDA ratio is 26.3x. This multiple is high and suggests investors are pricing in significant operational growth, or that the company's earnings before interest, taxes, depreciation, and amortization (EBITDA) is temporarily depressed relative to its enterprise value (EV).

The mixed signals-a low P/E but a high P/B and EV/EBITDA-suggest a business that has recently hit a massive earnings spike (FY 2025 net income was $23.8 million) but is still viewed with a growth premium, possibly due to its specialized role in satellite payloads and quantum sensing. You can read more about the underlying financial health in our full analysis: Breaking Down Frequency Electronics, Inc. (FEIM) Financial Health: Key Insights for Investors.

Stock Performance and Analyst View

The market has already recognized a lot of the good news. Over the last 12 months, Frequency Electronics, Inc.'s stock price has climbed by a staggering +108.35%, with its 52-week trading range spanning from a low of $12.70 to a high of $41.07. That's a huge run. Still, Wall Street analysts maintain a bullish perspective.

The analyst consensus is a Strong Buy, based on the two analysts covering the stock who both recommend buying it. Their average 12-month price target is set at $38.00, suggesting a potential upside from the current price, even after the massive rally. What this estimate hides, though, is the risk of a slowdown after the exceptional FY 2025 performance, particularly since the Q1 FY 2026 results showed a decline in revenue and operating income due to timing issues.

Dividend Profile: A Special Case

Frequency Electronics, Inc. is not a traditional dividend stock, but it did declare a special cash dividend of $1.00 per share in the past 12 months, which is the basis for a forward dividend yield of approximately 3.55%.

Here's the breakdown:

The payout ratio is low enough to be sustainable if management decides to make the dividend a regular feature, but for now, it's best to treat it as a special return of capital rather than a guaranteed income stream.

Risk Factors

You're looking at Frequency Electronics, Inc. (FEIM) after a stellar fiscal year 2025 (FY2025), where net income hit a strong $23.8 million, but you need to know the risks that could quickly derail that performance. The biggest challenge for Frequency Electronics, Inc. (FEIM) is a classic concentration risk, and it's a massive one: their near-total reliance on a single customer-the U.S. government.

Honestly, this single factor dictates the company's entire risk profile. In FY2025, a staggering 94% of total sales came from U.S. government contracts. This means any shift in defense spending, a change in political priorities, or a hiccup in the government's procurement process can immediately impact their top line. It's a high-stakes game of dependency.

• Reliance on one customer is the core risk.

Operational and Financial Volatility

The nature of government contracting creates significant operational risk, specifically in revenue recognition. Because contract award timing and customer milestones are non-linear, Frequency Electronics, Inc. (FEIM) sees what we call 'lumpy' quarterly results. You saw this play out when the company reported Q1 Fiscal Year 2026 revenue of only $13.8 million, a sharp drop from the exceptional $20.0 million recorded in Q4 FY2025.

This drop was due to customer-driven delays on a few key programs and some revenue being pulled forward into the prior quarter. This isn't a cancellation risk-management confirmed no contracts were cut-but it is a cash flow and perception risk. The market hates surprises, so these revenue fluctuations can lead to considerable stock volatility. Here's the quick math on the recent volatility:

What this estimate hides is the potential for delays to push revenue out of the fiscal year entirely, even if the backlog remains strong at around $71 million as of July 31, 2025.

External Competition and Mitigation Strategies

Beyond government timing, the company operates in a 'very competitive and rapidly changing environment' for high-precision timing and frequency products. You have to consider the constant threat of new products and technological changes, plus ongoing risks from supply chain issues, increasing raw material costs, and the availability of capital.

To mitigate the concentration risk and drive future growth, Frequency Electronics, Inc. (FEIM) is making two clear moves. First, they are investing in next-generation technology like the TURbO compact rubidium atomic clock, which is expected to generate a modest but meaningful $1 million to $2 million in revenue in Fiscal Year 2026. Second, they are actively pursuing the emerging quantum sensing market, leveraging their atomic oscillator expertise to expand their addressable market beyond traditional space and defense programs.

If you want a deeper dive into the company's financial structure and valuation, check out our full report: Breaking Down Frequency Electronics, Inc. (FEIM) Financial Health: Key Insights for Investors. Finance: defintely keep a close eye on the Q2 FY2026 revenue numbers to confirm the expected recovery.

Growth Opportunities

You're looking at Frequency Electronics, Inc. (FEIM) after a record year, and the question is simple: can they keep the momentum? The direct answer is yes, but the growth story shifts from their core business execution to a calculated bet on next-generation technology. The company's future is tied to its deep-seated expertise in precision timing, which is the defintely the backbone of the defense and space markets.

The company closed out the fiscal year ended April 30, 2025, with consolidated revenue of a stunning $69.8 million, which was the highest in 25 years. This performance, which led to a net income of $23.8 million, or $2.48 per diluted share, was driven mostly by their core U.S. commercial and government satellite programs. Here's the quick math: that segment surged to $40.9 million, accounting for 59% of total revenue. What this estimate hides is that some of this revenue was pulled forward from what was originally scheduled for the next fiscal year, so near-term revenue will be choppy.

Product Innovation and Market Expansion

The real long-term opportunity lies in two key areas that leverage their atomic clock expertise: the proliferated satellite market and quantum sensing. The shift in the satellite industry is toward smaller, shorter-lifespan satellites, and Frequency Electronics, Inc. is adapting its products to meet this new demand. They are actively expanding their portfolio with new products.

• Quantum Sensing: Leveraging their atomic oscillator expertise to develop quantum magnetometers and gravimeters, targeting a market projected to be worth billions.
• TURbO Oscillators: Their new compact rubidium atomic clock is already in serial production for alternative navigation systems, with a projected market potential of over $20 million by FY2027.
• Defense Contracts: They secured an additional $12 million to an existing contract for enhanced airborne time and frequency delivery systems, with shipments planned through 2027.

This push into new tech is why Research and Development (R&D) expense increased to $6.1 million in FY2025, or 9% of consolidated revenue, up from 6% in the prior year. They are investing to maintain technical leadership, and that is a smart move for a company in a niche, high-tech market.

Competitive Advantages and Forward Projections

Frequency Electronics, Inc. maintains a significant competitive edge through its long-standing reputation for high-reliability components, having earned over 100 awards of excellence for assemblies used in over 150 space and DOD programs. This heritage, plus their vertical integration in manufacturing, is crucial for securing national security-related programs, which demand strict quality control and reliable delivery. They are also strategically building credibility in the quantum space through collaborations with defense contractor Leidos and the MIT Lincoln Laboratory.

For the near-term, you should know that analysts expect a slight dip in the next fiscal year because of the revenue pull-forward into FY2025. Consensus estimates for FY2026 revenue are around $68.3 million, which is roughly flat with the last twelve months, and earnings per share are projected to be about $0.98. Still, the order backlog remains strong at $70 million as of the end of FY2025, providing good revenue visibility. The company is debt-free with a strong working capital position, which gives them the financial flexibility to invest in these growth areas. You can read more about their core philosophy here: Mission Statement, Vision, & Core Values of Frequency Electronics, Inc. (FEIM).