Breaking Down NVE Corporation (NVEC) Financial Health: Key Insights for Investors

You're looking at NVE Corporation (NVEC) because a stock with an exceptional current ratio of 16.1 and a maintained $1.00 per share quarterly cash dividend is defintely worth a deeper dive, but you need to see the whole picture. The reality is that the company's full fiscal year 2025 (FY2025) results show a clear revenue challenge, with total annual revenue dropping 13% to $25.9 million, which pushed net income down 12% to $15.1 million. Here's the quick math: while the balance sheet is rock-solid with roughly $20 million in cash and short-term investments as of Q3 2025, the top-line pressure is real, driven partly by a massive 64% plunge in defense sector sales. Still, NVEC is doubling down on its spintronics technology, boosting R&D spending by 33% in FY2025, a clear sign they are betting on new products in high-value markets like medical devices and electric vehicles to turn the tide. You have to weigh that strong liquidity and commitment to innovation against the near-term revenue softness; it's a classic value-versus-growth tension.

Revenue Analysis

You need to understand exactly where NVE Corporation (NVEC)'s money comes from, because the recent shifts in revenue streams tell a clear story about near-term risk and opportunity. The direct takeaway is this: NVE Corporation's total revenue for the fiscal year ended March 31, 2025, was $25.9 million, marking a significant year-over-year decline of 13% from the prior year's $29.8 million. That kind of drop is a flashing yellow light for investors, but the underlying segments reveal a strategic pivot.

The company primarily generates revenue from two sources: product sales and contract research and development (R&D). Historically, product sales of their spintronic (nanotechnology relying on electron spin) sensors and couplers have been the backbone. What's concerning is that the decrease in total revenue for fiscal year 2025 was driven by a 16% decrease in product sales. However, to be fair, the contract R&D revenue segment saw a massive increase of 112%, which partially cushioned the overall decline. This suggests a strategic shift toward high-margin, future-focused development work, even as core product sales slow.

Here's the quick math on the segment contributions and recent trends, which is crucial for mapping out future performance. Looking at a recent quarter (Q3 2025), product sales still accounted for the vast majority-about 96.7% of total revenue-with contract R&D making up the remaining small but high-growth portion. The real volatility is inside the product sales number.

• Product Sales: The core business, but saw a 16% decrease in FY 2025.
• Contract R&D: The growth engine, up 112% in FY 2025, though still a small slice of the pie.

The most significant change in the revenue stream is the dramatic divergence between defense and non-defense product sales. Defense sales, which can be volatile because of procurement cycles, plummeted by 64% in a recent quarter. But, and this is the opportunity, non-defense sales-which target high-value markets like medical devices, electric vehicles, and robotics-showed strong growth, rising by 21%. This is defintely a trend to watch, as it shows a successful push into less cyclical, commercial markets. If you want a deeper dive into who is betting on these shifts, you should check out Exploring NVE Corporation (NVEC) Investor Profile: Who's Buying and Why?

Here is a snapshot of the key revenue figures for the fiscal year ended March 31, 2025:

What this estimate hides is the potential for a rebound in defense sales, which can swing wildly. Still, the company is clearly mitigating that risk by aggressively growing its non-defense customer base. The action here is to monitor the next few quarters for continued strength in those commercial sectors.

Profitability Metrics

You're looking at NVE Corporation (NVEC), and the first thing that jumps out is a profitability profile that looks defintely different from the rest of the semiconductor industry. This company is a margin machine, but we need to look closer at the recent trends to see if that advantage is eroding.

The short takeaway is this: NVEC's gross, operating, and net profit margins are exceptional, but they are all showing signs of contraction in the most recent reporting periods, which is a key risk to monitor. For the second quarter of fiscal year 2026 (ended September 30, 2025), the company reported a net income of $3.31 million on revenue of $6.35 million.

Here's the quick math on their recent performance, contrasted with the industry median for Semiconductors and Related Devices (SIC code 3674) in 2024:

Honestly, those numbers are astounding. A 52% net margin means that for every dollar of revenue, NVE Corporation keeps 52 cents as profit. The industry median is actually negative, which shows just how much NVE's niche in spintronics-a nanotechnology focused on electron spin-acts as a protective moat.

Still, you need to focus on the trend. Gross margin contracted to 78% in the second quarter of fiscal 2026, down from 86% in the prior-year quarter. This drop is a direct signal of a shift in operational efficiency (e.g., cost management) and product mix. Management cited a less profitable product mix and an increase in distributor sales, which typically carry lower margins than direct sales.

The operational efficiency analysis shows that while gross margin is under pressure, the company has historically managed its operating expenses well. The operating margin of 58% demonstrates strong control over selling, general, and administrative (SG&A) costs and research & development (R&D), especially compared to the industry where the median operating margin was negative. The decrease in net income for the first half of fiscal 2026 was about 15%, dropping to $6.89 million from $8.12 million in the first half of fiscal 2025, showing that the margin pressure is translating directly to the bottom line.

What this estimate hides is the volatility from contract research and development (R&D) revenue, which decreased by 68% in the recent quarter. This revenue stream is lumpy, so relying on product sales, which are up slightly (1%), is a more stable but lower-margin path. For a deeper understanding of their strategic focus, you should review their Mission Statement, Vision, & Core Values of NVE Corporation (NVEC).

Your action item here is clear: Monitor the gross margin trend in the next two quarters. If it stabilizes above 75%, the profitability moat is secure; if it dips below, the cost structure needs a serious re-evaluation.

Debt vs. Equity Structure

You're looking at NVE Corporation (NVEC) and its balance sheet tells a very clear story: the company is defintely not a debt-fueled growth machine. The direct takeaway is that NVE Corporation operates with virtually no financial leverage, relying almost entirely on shareholder equity and retained earnings to fund operations and growth.

For the fiscal year ended March 31, 2025, NVE Corporation's balance sheet showed minimal debt. Specifically, long-term debt was negligible, reported at around $83,000. Short-term obligations, like total current liabilities, were higher at approximately $1.17 million as of the fiscal year-end, but this primarily consists of operating liabilities, not traditional bank debt or bonds. This structure provides extreme financial stability, a rare sight in the capital-intensive semiconductor industry.

Here's the quick math on financial leverage: the company's Total Debt-to-Equity (D/E) ratio for the most recent quarter was an ultra-low 1.61%. What this estimate hides is that the ratio is so low because the company has substantial Total Shareholders' Equity, which stood at about $62.27 million at the end of the 2025 fiscal year.

To be fair, this is a massive outlier when you look at industry standards. The average D/E ratio for the Semiconductors industry in 2025 is closer to 40.58%. NVE Corporation's ratio is less than two percent of that industry average. They simply don't use debt financing.

• Debt-to-Equity Ratio: 1.61% (NVEC) vs. 40.58% (Industry Average).
• Long-Term Debt (FY2025): Approximately $83,000.
• Total Shareholders' Equity (FY2025): Approximately $62.27 million.

Because the company has such a minimal debt load, there is no recent activity to report on major debt issuances, credit ratings, or refinancing. They haven't needed to tap the credit markets. This means NVE Corporation's growth is fundamentally financed through retained earnings and the initial equity capital, not through borrowing. This conservative approach limits financial risk, but it can also limit the speed of expansion compared to competitors who aggressively use debt to fund large capital expenditures or acquisitions. Still, a debt-free balance sheet gives them significant operational flexibility in an economic downturn.

If you want to dig deeper into the rest of the company's financial picture, you can read the full analysis at Breaking Down NVE Corporation (NVEC) Financial Health: Key Insights for Investors. Finance: review NVE Corporation's cash flow statement for FY2025 to confirm the source of capital expenditures by Friday.

Liquidity and Solvency

You need to know if NVE Corporation (NVEC) has the cash to cover its near-term bills, and the answer is a resounding yes. The company's liquidity position is exceptionally strong, almost to a fault, indicating a massive buffer against short-term economic shocks, but also potentially suggesting an inefficient use of capital.

The core measure of this is the Current Ratio (Current Assets divided by Current Liabilities), which for NVE Corporation in fiscal year 2025 stood at an astonishing 28.4x. To put that in perspective, a healthy company in the tech sector usually aims for a ratio between 1.5x and 3.0x. This means NVE Corporation has over 28 dollars in current assets for every dollar of current liabilities. The Quick Ratio, which strips out inventory, was also extremely high at 21.21 for the most recent quarter, confirming that their liquidity isn't tied up in unsold product.

Analysis of Working Capital Trends

While the overall liquidity is immense, the trend shows a slight, but negligible, tightening. The Current Ratio did decrease from 32.0x in FY 2024 to 28.4x in FY 2025. This is a minor shift, but it's a trend to watch, not a concern. The company's total liabilities are minimal, reported near only $1.6 million in Q3 2025, which is the main driver of these sky-high ratios. Honestly, their balance sheet is a fortress.

The working capital components themselves show a relatively stable picture for the year ending March 31, 2025 (FY 2025):

• Change in Accounts Receivable: Down $0.44 million.
• Change in Inventory: Down $0.29 million.
• Change in Accounts Payable: Up $0.09 million.

These small changes in working capital accounts reflect the lower revenue seen in the period but don't signal any operational distress. The company is managing its receivables and inventory tightly.

Cash Flow Statements Overview (FY 2025)

Cash flow is where the rubber meets the road-it shows where the money is actually coming from and going. NVE Corporation's cash flow statement for FY 2025 tells a clear story of a highly profitable, mature company that is returning capital to shareholders, even while revenue is soft. You can find a more detailed breakdown in the full post: Breaking Down NVE Corporation (NVEC) Financial Health: Key Insights for Investors.

Here's the quick math on the three main cash flow activities for FY 2025 (in millions USD):

Operating Cash Flow of $14.31 million is robust, showing the business is generating plenty of cash from its core activities. Investing Cash Flow was a net inflow of $2.67 million, largely due to investments in securities, which is typical for a cash-rich company. The Financing Cash Flow of -$19.23 million is a large net outflow, almost entirely due to $19.34 million in common dividends paid, which is the main way they distribute their massive cash hoard.

Liquidity Concerns and Strengths

The primary strength is the sheer size of the liquidity buffer. There are defintely no near-term liquidity concerns. The company's cash from operations easily covers its capital expenditures and its substantial dividend payment. What this estimate hides, however, is the opportunity cost of holding so much cash, which is something management needs to address. They are incredibly safe, but perhaps too conservative. Still, for an investor focused on safety and dividend sustainability, the financial health is top-tier.

Next step: Dig into NVE Corporation's profitability and efficiency metrics to see if the high liquidity is being put to good use.

Valuation Analysis

You are asking the core question for any investor: Is NVE Corporation (NVEC) currently overvalued or undervalued? The quick answer is that its valuation multiples suggest it is trading at a premium to the broader technology sector, but its high dividend yield and strong balance sheet provide a floor. The stock is likely fairly valued to slightly overvalued, depending on how much you weigh its cash-rich status versus its slowing growth.

Let's look at the key metrics based on the 2025 fiscal year data. Here's the quick math on what the market is paying for NVE Corporation's earnings and assets:

• Price-to-Earnings (P/E) Ratio: At approximately 23.98, the P/E ratio is slightly below its 10-year average of 24.06, but it's still a premium multiple for a company with recent revenue headwinds.
• Price-to-Book (P/B) Ratio: The P/B ratio stands around 4.95. This is a high multiple, indicating the market values NVE Corporation at nearly five times its net asset value (what it would be worth if liquidated).
• Enterprise Value-to-EBITDA (EV/EBITDA): The fiscal year 2025 EV/EBITDA was 16.1x. This multiple is high, especially when you consider its peer group average in the Information Technology sector is often lower, signaling a rich valuation for its operating cash flow.

The company is not cheap on a traditional valuation basis, but you have to factor in its specialized spintronics technology and flawless balance sheet.

Stock Price Trends and Analyst Sentiment

The stock price movement over the last 12 months shows significant volatility. The NVE Corporation share price as of November 15, 2025, was $61.95, having traded in a wide 52-week range between a low of $51.50 and a high of $88.50. The recent trend is concerning; the price has fallen by -10.28% in the last 10 trading days leading up to mid-November 2025. This drop suggests investors are reacting negatively to recent news, likely tied to the Q2 2026 earnings report that showed a decline in net income.

To be fair, the stock has underperformed the broader US Semiconductor industry, which returned 44.6% over the past year. It's been a tough year for NVE Corporation investors.

Analyst consensus is split, which is typical for a niche company like this. The official analyst consensus is a Neutral rating, with one analyst holding a Hold position and zero Buy or Sell ratings. However, technical indicators lean toward a Strong Sell, and the average 30-day price target is a bearish $50.93.

The Dividend Story: High Yield, High Payout

The dividend is the major draw for many NVE Corporation investors, and it's a critical part of the valuation puzzle. The company maintains an attractive annual dividend of $4.00 per share, translating to a high dividend yield of 6.46% as of November 2025. This yield is substantially higher than the Technology sector average of about 1.64%.

Here's the catch: the dividend payout ratio is an unsustainable 139.9%. A payout ratio over 100% means the company is paying out more in dividends than it is earning in net income, which is often subsidized by its large cash reserves. This is a red flag for long-term dividend stability if earnings don't improve. You can dive deeper into who is holding the shares and why they tolerate this risk by Exploring NVE Corporation (NVEC) Investor Profile: Who's Buying and Why?

Risk Factors

You're looking at NVE Corporation (NVEC) because of its exceptional margins and rock-solid balance sheet, but honestly, the near-term financial health shows some cracks you can't ignore. The biggest risks stem from a volatile revenue mix and customer concentration, which have directly contributed to a significant earnings slowdown in fiscal year 2025.

The core issue is that while the financial structure is defintely strong-the current ratio is an exceptional 16.1-the operational risks are translating into a revenue stall. For the first nine months of fiscal year 2025, total revenue was down 18% year-over-year to $18.6 million, with net income falling 16% to $11.2 million. You need to watch the levers that are causing this decline.

Operational and Strategic Volatility

The company's revenue stream is subject to two major internal risks: reliance on a few large customers and the lumpiness of its defense business. NVE Corporation has consistently cited reliance on several large customers for a significant percentage of revenue as a key risk in its filings.

Plus, the defense segment is highly volatile. In the second quarter of fiscal 2026 (ended September 30, 2025), defense sales plummeted by a massive 64% year-over-year, which was a primary driver of the overall revenue decline. That's a huge drop, and it shows how quickly a key segment can turn. Another operational headwind is the gross margin contraction, which dropped from 86% to 78% in Q2 FY2026 due to a shift toward a less profitable product mix and stronger distributor sales.

• Customer concentration risk is high.
• Defense sales volatility is severe (64% drop in Q2 FY2026).
• Gross margin is under pressure from product mix.

External and Valuation Risks

The external risks are typical for a specialized semiconductor player but are amplified by the recent growth stall. The semiconductor industry is inherently volatile, which is reflected in NVE Corporation's beta of 1.24, meaning its stock price tends to be more volatile than the overall market. Also, while the company has a U.S.-centric manufacturing base, it still lists risks related to tariffs, customs, duties, and other trade barriers in its SEC filings.

The valuation is another major risk. Despite the recent revenue declines, the stock is trading at a premium. For example, the Price-to-Sales (P/S) ratio of 13.56 is above the historical median, indicating a premium valuation that may not be fully supported by the current growth trajectory.

Mitigation Strategies and Clear Actions

To be fair, NVE Corporation is not sitting still. Their primary mitigation strategy is a decisive shift in focus toward high-growth, non-defense markets like medical devices, electric vehicles, and industrial automation/robotics. This is working: non-defense sales actually increased by 21% year-over-year in Q2 FY2026, partially offsetting the defense decline.

They are also strengthening their supply chain and operations. Management is investing an additional $1 million to $1.5 million in capital expenditure in fiscal 2026 to bring backend operations, like packaging and test, in-house. This is a smart move to reduce supply chain risk and improve control over quality and costs. Plus, they anticipate tax relief in the form of advanced manufacturing investment tax credits ranging from $700,000 to $1,000,000 for fiscal 2026.

Here's the quick math: the 21% non-defense growth is the key offset to the 64% defense drop. The long-term thesis rests on this pivot. For a deeper dive into who is betting on this pivot, you should check out Exploring NVE Corporation (NVEC) Investor Profile: Who's Buying and Why?

Growth Opportunities

You're looking past the recent dip in NVE Corporation (NVEC) revenue, and honestly, that's the right move. The company's growth story isn't about the 13% annual revenue decrease to $25.9 million in fiscal year 2025; it's about where they are aggressively placing their bets for the future. They are doubling down on their core competitive advantage: spintronics.

The near-term outlook suggests a stabilization, with analysts projecting fiscal year 2026 revenue at around $25.87 million and Earnings Per Share (EPS) at $3.18. This stability hinges on a clear strategic pivot away from the declining defense sector and into high-growth, high-precision markets like medical devices, industrial automation, and robotics. That's the action to watch.

Key Growth Drivers and Product Innovations

NVE Corporation's future revenue growth is tied directly to their research and development (R&D) investments, which saw a 33% increase in fiscal 2025. This aggressive R&D spend is already translating into new product lines, which is crucial for a niche technology company. For example, contract R&D revenue was up a massive 112% in fiscal 2025, offsetting some product sales weakness.

The new product innovations are targeting specific, high-value applications:

• Wafer-Level Chip Scale Sensors: Smaller, higher-performance sensors for miniaturization.
• Next-Gen MRAM: Magnetoresistive RAM for anti-tamper and security applications.
• Advanced Sensors: Extremely Sensitive TMR (Tunneling Magnetoresistance) sensors for hearing aids and medical devices.
• Rare Earth-Free Ferrite Magnet Sensors: Addressing supply chain risks by exploring alternatives to rare earth magnets.

This is a defintely smart way to build a moat. They are chasing the high-end of the Hall Effect sensor market, where their superior speed and energy efficiency in couplers give them a real edge in energy management systems.

Strategic Initiatives and Competitive Edge

The company is not just innovating; they are investing in capacity and capability. They are spending between $4 million and $5 million across fiscal years 2025 and 2026 on capital investments, including new manufacturing equipment to bring wafer-level chip scale package manufacturing in-house. Here's the quick math on why this matters: in-house manufacturing captures more value and increases self-sufficiency, which is a major competitive advantage in a complex global supply chain.

Their financial health is a massive competitive edge, too. NVE Corporation maintains a gross margin of 84% for fiscal 2025, which is exceptional. Plus, their liquidity is robust, with a current ratio that has recently been as high as 28.4, giving them a huge cushion to fund their innovation and growth plans without external capital pressure. They also leverage tax advantages, expecting between $700,000 and $1,000,000 in advanced manufacturing investment tax credits for fiscal 2026.

To see the full picture of NVE Corporation's financial stability, you should read the rest of the analysis: Breaking Down NVE Corporation (NVEC) Financial Health: Key Insights for Investors.