Breaking Down Ituran Location and Control Ltd. (ITRN) Financial Health: Key Insights for Investors

You are defintely right to be looking closely at Ituran Location and Control Ltd. (ITRN) right now; the Q3 2025 earnings report, released mid-November, shows a business that's generating serious cash flow but still navigating a complex global market.

Honestly, the headline numbers are strong: the company pulled in a record revenue of $92.3 million for the quarter, an 11% jump year-over-year, with net income rising to $14.6 million. That growth is anchored in their subscription model, which accounted for $67.6 million of that revenue. But here's the quick math for the full picture: they've added 40,000 net new subscribers in Q3, bringing their total base to 2,588,000 users, and they are on track to add between 220,000 to 240,000 net new subscribers for the full year 2025. Still, with a recent US market launch for their IturanMOB smart-mobility solution, you need to know how that new growth engine balances against their core Latin American and Israeli markets, and what that $93.1 million in net cash means for future acquisitions.

Revenue Analysis

You need to know where Ituran Location and Control Ltd. (ITRN)'s money is coming from, and the short answer is: subscriptions are the engine, and that engine is accelerating. The company's revenue structure is highly predictable, with a strong tilt toward recurring fees, which is what we like to see in a telematics business.

For the third quarter of 2025, Ituran Location and Control Ltd. (ITRN) reported a total revenue of $92.3 million, which marks an 11% increase year-over-year. This is a solid jump, especially when you consider the full-year context; the trailing twelve months (TTM) revenue as of November 2025 stood at approximately $0.33 Billion. The growth trend is defintely picking up pace, moving from a 2% year-over-year increase in Q2 2025 to 11% in Q3 2025.

Primary Revenue Streams: Subscription Dominance

The revenue breakdown shows a very healthy business mix, heavily weighted toward high-margin, sticky subscription fees. This is the core of their business model, providing stability and visibility into future earnings. The company operates in two main segments: Telematics Services and Telematics Products.

Here is the Q3 2025 breakdown of the two segments:

• Telematics Services (Subscription Fees): This accounted for 73% of total revenue. These services include Stolen Vehicle Recovery (SVR), fleet management, and connected-car solutions for a subscriber base that reached 2,588,000 by the end of Q3 2025.
• Telematics Products (Hardware Sales): This made up the remaining 27% of total revenue. This segment involves the sale of hardware like tracking devices and control center equipment.

The reliance on subscription revenue is a huge plus because it smooths out the cyclicality that often hits hardware-focused companies. It's a classic software-as-a-service (SaaS) model applied to the automotive world.

Growth Drivers and Segment Performance

Looking at the growth rates for Q3 2025, the subscription segment is the clear growth driver. Subscription fees alone reached $67.6 million, an impressive 13% increase year-over-year. Product revenues also grew, but at a more modest 4% year-over-year, totaling $24.7 million. This tells you the company is successfully monetizing its growing subscriber base with more services, not just selling more initial hardware units.

The company is also actively expanding its geographic and product reach, which will shape future revenue streams. They are pushing into the U.S. market with a smart-mobility solution called IturanMOB, targeting small to medium-sized car rental and shared-mobility companies. Plus, they are seeing solid traction with new products for the motorcycle market in Latin America, including a partnership with BMW Motorrad in Brazil. These efforts are key to maintaining the current growth trajectory. You can read more about their strategy in our analysis of their Mission Statement, Vision, & Core Values of Ituran Location and Control Ltd. (ITRN).

Here's the quick math on the quarterly performance:

What this table shows is a favorable shift: the highest-margin, most recurring part of the business is growing faster than the overall company and the product segment. This is a positive signal for margin expansion down the road.

Profitability Metrics

You need to know if Ituran Location and Control Ltd. (ITRN) is translating its strong subscriber growth into efficient, sustainable profit. The short answer is yes, but the margins tell a more nuanced story about operational efficiency.

Looking at the third quarter of 2025 (Q3 2025) results, the company reported total revenue of $92.3 million. This impressive top-line growth is backed by solid, if slightly contracting, margins. Your focus should be on the cost structure, particularly how the high-margin subscription business offsets the lower-margin product sales.

Here's the quick math on ITRN's core profitability for Q3 2025:

• Gross Profit: $46.4 million
• Operating Income: $19.6 million
• Net Income: $14.6 million

The company is defintely profitable.

Gross, Operating, and Net Profit Margins

The core of ITRN's financial health is its subscription-based business model, which drives a high overall Gross Profit Margin (GPM). In Q3 2025, the total GPM stood at 50.3% of revenues, up from 48.1% in the prior-year quarter. This increase is a strong sign of pricing power and cost control in the core business.

However, once you move down the income statement, you see the pressure points. The Operating Margin (or operating profit margin) for Q3 2025 was 21.3%, a slight dip from 22.0% in Q3 2024. This tells you that while the cost of goods sold (COGS) is well-managed, operating expenses like sales, general, and administrative (SG&A) costs are growing faster than revenue, which is common when a company is in an expansion phase, like the launch of IturanMOB in the U.S..

Finally, the Net Profit Margin was 15.9% in Q3 2025, down from 16.4% a year ago. This small contraction is a function of the operating margin pressure and, notably, a rise in finance expenses, which were impacted by currency fluctuations related to the Israeli Shekel.

Operational Efficiency and Industry Comparison

The key to understanding ITRN's operational efficiency lies in the segmentation of its margins. The subscription revenue Gross Margin is a robust 60.1%, which is the gold standard for recurring revenue businesses. This high margin is what funds the company's expansion and dividend policy. Product revenue, which involves hardware sales, is much lower but still healthy at 23.6%. The mix shift between these two revenue streams is what dictates the overall Gross Margin trend.

When you compare ITRN's Trailing Twelve Months (TTM) Operating Margin of 21.36% (as of November 2025) to competitors in the security and telematics space, you see a mixed picture. For instance, ADT has a higher operating margin of 24.97%, and NAPCO Security Technologies is even higher at 29.86%.

What this comparison highlights is that while ITRN has a high-quality revenue base, there's room to improve cost management below the gross profit line to catch up to peers. The company has a strong foundation, but its operating expenses (OpEx) are currently a larger drag on profitability than some rivals. You can read more about the strategic direction that influences this spending in the Mission Statement, Vision, & Core Values of Ituran Location and Control Ltd. (ITRN).

Debt vs. Equity Structure

You want to know if Ituran Location and Control Ltd. (ITRN) is relying on debt to fuel its growth, and the short answer is no. The company operates with a remarkably conservative financial structure, prioritizing organic cash flow and equity over leverage, which is defintely a low-risk profile for investors.

As of the third quarter of 2025, Ituran Location and Control Ltd. is in an enviable net cash position, reporting $93.1 million in net cash, including marketable securities, as of September 30, 2025. This is a significant increase from $77.3 million at the end of 2024. The business model, which relies heavily on subscription-based revenue from its location-based services, generates substantial, predictable operating cash flow, which was $21.3 million in Q3 2025 alone.

Here's the quick math on their leverage:

• Total Debt (June 2025): Approximately $5.17 Million USD.
• Short-Term Debt: The majority of their debt is minimal, often consisting of current liabilities rather than long-term bank loans.
• Long-Term Debt: Virtually non-existent, reflecting a strategy to avoid interest expense.

The company's debt-to-equity (D/E) ratio confirms this ultra-conservative stance. The D/E ratio measures a company's total liabilities relative to its shareholder equity-a lower number means less risk. For Ituran Location and Control Ltd., the D/E ratio was a mere 0.0251 as of June 30, 2025.

To be fair, a D/E of 0.0251 is dramatically lower than the industry benchmark for related sectors like Communication Equipment, which typically averages around 0.47 as of November 2025. This tells you Ituran Location and Control Ltd. is essentially self-funding its operations and expansion, minimizing financial risk even if the economy slows down. They simply don't need to borrow much.

This debt-averse approach means you won't see recent news about massive debt issuances or complex refinancing activities. Instead, the focus is on returning capital to shareholders. The Board declared a quarterly dividend of $10.0 million, or $0.50 per share, for Q3 2025, plus they executed a $1.5 million share buyback during the quarter. This is a classic sign of a mature, cash-rich company balancing growth with shareholder rewards. If you want to dive deeper into their long-term strategy, you can review the Mission Statement, Vision, & Core Values of Ituran Location and Control Ltd. (ITRN).

Liquidity and Solvency

When you look at a company like Ituran Location and Control Ltd. (ITRN), the first thing we check as analysts is whether it can pay its bills. The short answer for Ituran in the 2025 fiscal year is a resounding yes. Their liquidity position is exceptionally strong, underpinned by a significant net cash balance and robust cash generation from their core subscription business.

As of September 30, 2025, the company's balance sheet reflects a very comfortable cushion against near-term obligations, which is exactly what you want to see in a stable, subscription-based business model.

Current and Quick Ratios

The Current Ratio and Quick Ratio (or Acid-Test Ratio) are your primary gauges of short-term financial health. Ituran Location and Control Ltd. (ITRN) demonstrates a high degree of liquidity, meaning they have plenty of easily convertible assets to cover their liabilities.

• The Current Ratio for Q3 2025 stands at 2.25. This means for every dollar of current liability, the company holds $2.25 in current assets. A ratio over 2.0 is generally considered excellent.
• The Quick Ratio is approximately 1.52. This ratio strips out inventory (which is $25.7 million), focusing only on the most liquid assets like cash ($93.1 million) and accounts receivable ($62.1 million). A Quick Ratio above 1.0 is a sign of very healthy, immediate liquidity.

Honestly, these ratios tell you the company is not just solvent; it's swimming in short-term financial flexibility. They could pay off all their current debts and still have significant cash left over.

Analysis of Working Capital Trends

Working capital (Current Assets minus Current Liabilities) is the cash available for day-to-day operations and growth. Ituran Location and Control Ltd. (ITRN) has seen a positive, upward trend in working capital throughout 2025, which is a strong indicator of effective asset management and consistent profitability.

Here's the quick math on the trend (in millions of USD):

The working capital has grown from $108.1 million in Q1 to $127.8 million in Q3 2025. This consistent growth of nearly $20 million over nine months shows that the company's strong revenue stream is outpacing any growth in short-term operating expenses and liabilities. This trend is defintely a major financial strength.

Cash Flow Statements Overview

The cash flow statement confirms the underlying strength suggested by the balance sheet, showing that the company's profits translate directly into cash.

In Q3 2025 alone, Ituran Location and Control Ltd. (ITRN) generated $21.3 million in cash flow from operations (CFO). This is the lifeblood of the company, driven by its high-margin, recurring subscription fees. This operating cash is more than enough to cover the company's planned capital expenditures and shareholder returns.

• Operating Cash Flow (CFO): Consistently strong and positive. Q3 2025 CFO of $21.3 million easily covers the quarter's net income of $14.6 million, indicating high-quality earnings with minimal non-cash adjustments.
• Investing Cash Flow (CFI): This is a net outflow, as expected for a growing technology business. The Q3 2025 net cash used in investing activities was approximately $18.9 million, primarily due to capital expenditures of $17.169 million. This CapEx is largely for expanding the subscriber base (installing tracking units), which is an investment in future subscription revenue.
• Financing Cash Flow (CFF): This is a planned net outflow, a positive sign of shareholder-friendly management. The company paid a dividend of $10.0 million and repurchased $1.5 million in shares during Q3 2025. The dividend policy was even increased by 25% at the end of 2024 to $10 million per quarter, which is a clear signal of management's confidence in future cash generation.

The key takeaway is that the core business generates more than enough cash to fund its growth investments and reward shareholders, all without taking on significant debt. You can dive deeper into the ownership structure in Exploring Ituran Location and Control Ltd. (ITRN) Investor Profile: Who's Buying and Why?

Valuation Analysis

You're looking at Ituran Location and Control Ltd. (ITRN) and asking the right question: Is the stock priced fairly, or is the market missing something? Based on its 2025 fiscal year metrics, the consensus points to a clear takeaway: Ituran Location and Control Ltd. (ITRN) appears modestly undervalued right now, especially when factoring in its dividend yield and growth forecasts.

The stock closed recently at approximately $37.99, having delivered a strong 29.81% change over the past year. Still, that price sits well below its 52-week high of $45.43. The near-term trend shows some volatility, with the price declining by -1.09% over the last ten trading days. A quick look at the core valuation ratios tells you why analysts see upside.

Here's the quick math on where Ituran Location and Control Ltd. (ITRN) stands against its earnings and assets:

• Price-to-Earnings (P/E): The trailing P/E ratio is around 13.15. For a company with a strong return on equity (ROE) of 28.24%, this multiple is defintely attractive compared to the broader market average, suggesting a discount.
• Price-to-Book (P/B): The P/B ratio is 3.67. This is higher than a pure-play industrial average, but it reflects the company's high-margin, asset-light Telematics services business model, which you can read more about in their Mission Statement, Vision, & Core Values of Ituran Location and Control Ltd. (ITRN).
• Enterprise Value-to-EBITDA (EV/EBITDA): The last twelve months (LTM) EV/EBITDA sits at 7.3x. This is a very reasonable multiple for a technology-enabled service provider, signaling that the market isn't overpaying for the company's operating cash flow.

The company also offers a compelling income component. The annualized dividend is $2.00 per share, translating to a healthy dividend yield of approximately 5.4%. This is a significant yield in the current environment. The payout ratio is a manageable 61.5%, indicating the dividend is sufficiently covered by earnings, which is a key sign of a sustainable payout.

The Wall Street consensus is clear. Analysts rate Ituran Location and Control Ltd. (ITRN) as a 'Buy'. The average 12-month price target is a strong $50.00, which implies a potential upside of 31.61% from the current stock price. This target suggests analysts believe the valuation gap will close as the market recognizes the company's consistent profitability and subscription-based revenue stability.

What this estimate hides, however, is that while the stock has a high-end target of $52.50, it also faces macroeconomic risks in its key operating regions, particularly Brazil. Still, the underlying fundamentals-strong earnings, a low P/E multiple relative to growth, and a high dividend yield-make the case for a buy rating very compelling.

Next Step: Review the Q3 2025 earnings report to confirm the stability of the $0.74 EPS and $92.28 million revenue beat.

Risk Factors

You want to understand the downside of investing in Ituran Location and Control Ltd. (ITRN), and that's smart. While the company shows solid fundamentals-like net cash of $93.1 million as of September 30, 2025, and a consistent dividend-its global footprint means its risk profile is more complex than a purely domestic tech stock. The biggest near-term risks are external, specifically currency volatility and geopolitical events, but competitive pressure is always a factor.

Honestly, the biggest financial headwind in 2025 has been the currency translation effect.

• Currency Fluctuation: The strength of the US Dollar (USD) against currencies like the Brazilian Real and Mexican Peso has a direct, negative impact on reported results. For example, in Q2 2025, local currency revenue growth was 4%, double the reported USD growth rate of 2%, masking underlying operational health.
• Geopolitical and Economic Uncertainty: Operating in regions like Israel and Latin America exposes the company to elevated risk. In Q2 2025, a brief war with Iran caused a temporary halt in new car sales in Israel, contributing to a 6% year-over-year drop in product revenues to $23.0 million.
• Competitive Pressure: The telematics and connected-car market is getting crowded. While Ituran Location and Control Ltd. has a strong niche in Stolen Vehicle Recovery (SVR), especially in high-theft regions, larger, well-capitalized competitors could erode market share or compress margins.

The company's reliance on partnerships for subscriber growth is a strategic risk you need to monitor. They target 220,000 to 240,000 new subscribers for the full 2025 fiscal year, and meeting this goal hinges on successful execution of OEM deals, like the one with Stellantis in Q1 2025, and new market initiatives. If those B2B sales cycles drag or a major partner shifts strategy, subscriber additions could fall short, which is defintely a concern for a subscription-based model.

Here's a quick look at the core risks and management's counter-strategy:

What this estimate hides is that while the Q2 2025 revenue of $86.8 million missed forecasts, the subscription revenue grew by a healthy 6% year-over-year, showing customer stickiness remains high. The company is actively mitigating risk by expanding its offerings, like the launch of IturanMOB in the United States, to create an additional long-term growth engine outside its traditional markets.

For a deeper dive into the company's financial stability, check out the full analysis: Breaking Down Ituran Location and Control Ltd. (ITRN) Financial Health: Key Insights for Investors.

Growth Opportunities

You're looking at Ituran Location and Control Ltd. (ITRN) and wondering where the next wave of growth comes from, especially in a market that's becoming more crowded. The core takeaway is this: Ituran's future growth isn't about explosive, high-tech leaps, but about disciplined, profitable expansion in high-need segments and geographies, backed by a rock-solid balance sheet.

The Street's consensus for 2025 points to a steady, predictable trajectory. Analysts forecast full-year revenue to hit approximately $342.56 million, reflecting a forecast annual growth rate of about 6.35%. Net income is projected to be around $57,411,587. This isn't the 50% growth of a Silicon Valley unicorn, but for a company with a high percentage of recurring subscription revenue, it's a defintely reliable path.

Key Growth Drivers and Expansion Strategy

The primary engine for Ituran Location and Control Ltd. remains its ability to grow its subscriber base and expand its reach into new, high-potential markets. Honestly, the biggest driver is the simple, yet critical, demand for Stolen Vehicle Recovery (SVR) and telematics in territories with high theft rates, particularly Latin America.

The company's strategy for 2025 focuses on three clear areas. First, subscriber growth: Ituran is targeting an addition of between 220,000 to 240,000 net new subscribers in 2025. Second, product innovation and market penetration: They've launched Ituran Mob in Brazil and are planning to expand this service, which targets small to medium-sized car rental companies, into the U.S. market. That's a smart move to diversify away from country concentration risk. Third, strategic partnerships:

• Securing new OEM partnerships, like the one announced with Stellantis in South America in April 2025.
• Targeting the two-wheel market, including a partnership with BMW Motorrad in Brazil.
• Entering untapped segments, such as the low-priced vehicle and secondhand car markets in Israel.

Competitive Edge and Financial Strength

What positions Ituran Location and Control Ltd. to capture this growth is its established competitive moat. The company is already the largest Original Equipment Manufacturer (OEM) telematics provider in Latin America, which gives it a significant advantage in securing new factory-installed contracts. Plus, the high success rate of its SVR technology-recovering 80% of stolen vehicles-is a powerful, tangible selling point that competitors struggle to match.

Financially, the company is exceptionally healthy. This stability provides the capital for future growth initiatives, including potential acquisitions for geographical expansion. Here's the quick math on their financial position as of mid-2025:

A strong balance sheet means they can fund growth internally without taking on costly debt. That's a huge operational advantage in a capital-intensive industry.

For a deeper dive into the company's full financial picture, you should read the full post: Breaking Down Ituran Location and Control Ltd. (ITRN) Financial Health: Key Insights for Investors.

Next Step: Portfolio Managers: Re-evaluate Ituran Location and Control Ltd.'s valuation using a discounted cash flow (DCF) model, incorporating the 2025 consensus revenue of $342.56 million and the 6.35% growth rate as the base case for the next three years.