Esco Technologies (ESE) AI Stock Analysis

• Market Cap: $3.67B
• Dividend Yield: 0.22%
• Average Volume (3M): 185.06K
• Price to Earnings (P/E): 33.4
• Beta (1Y): 0.93
• Revenue Growth: 8.94%
• EPS Growth: 18.56%
• Country: US
• Employees: 3,242
• Sector: Technology
• Sector Strength: 40
• Industry: Hardware, Equipment & Parts
• EPS (TTM): 4.26
• Shares Outstanding: 25,806,032
• 10 Day Avg. Volume: 188,949
• 30 Day Avg. Volume: 185,064
• PEG Ratio: 1.80
• Price to Book (P/B): N/A
• Price to Sales (P/S): 3.90
• Price to Cash Flow (P/CF): 30.10
• P/FCF Ratio: 33.50
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $164.00
• Price Target Upside: 7.95% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2

Esco Technologies demonstrates strong financial performance and robust earnings growth, particularly in segments like Aerospace and Defense. Technical indicators show upward momentum, though caution is advised due to overbought signals. The valuation suggests potential overvaluation, yet strategic initiatives and raised guidance are promising for continued success.

Positive Factors

Acquisitions

ESE's improved organic operating profile guidance for FY25, as well as the $550M SM&P acquisition, led to an increase in the price target to $190.

Earnings

ESE reported first quarter adjusted EPS significantly above estimates, indicating strong financial performance.

Financial Guidance

ESE raised FY25 EPS guidance expectations given improved organic performance across Aerospace & Defense, USG, and Test segments.

Negative Factors

Industry Risks

The Aerospace & Defense segment showed strong performance, with Navy sales increasing by 56% year-over-year, offsetting concerns about the Boeing strikes.

Esco Technologies Business Overview & Revenue Model

Company Description

ESCO Technologies Inc. produces and supplies engineered products and systems for industrial and commercial markets worldwide. It operates through Aerospace & Defense, Utility Solutions Group, and RF Shielding and Test segments. The Aerospace & Defense segment designs and manufactures filtration products, including hydraulic filter elements and fluid control devices used in commercial aerospace applications; filter mechanisms used in micro-propulsion devices for satellites; and custom designed filters for manned aircraft and submarines. It also designs, develops, and manufactures elastomeric-based signature reduction solutions for U.S. naval vessels; and mission-critical bushings, pins, sleeves, and precision-tolerance machined components for landing gear, rotor heads, engine mounts, flight controls, and actuation systems for the aerospace and defense industries. The Utility Solutions Group segment provides diagnostic testing solutions that enable electric power grid operators to assess the integrity of high-voltage power delivery equipment; and decision support tools for the renewable energy industry, primarily wind and solar. The RF Shielding and Test segment designs and manufactures RF test and secure communication facilities, acoustic test enclosures, RF and magnetically shielded rooms, RF measurement systems, and broadcast and recording studios; and RF absorptive materials and filters, active compensation systems, antennas, antenna masts, turntables, electric and magnetic probes, RF test cells, proprietary measurement software, and other test accessories to perform various tests. It also provides services, such as calibration for antennas and field probes, chamber certification, field surveys, customer training, and various product tests. The company distributes its products through a network of distributors, sales representatives, direct sales teams, and in-house sales personnel. The company was incorporated in 1990 and is based in St. Louis, Missouri.

How the Company Makes Money

Esco Technologies makes money through the sale of its specialized products and solutions across its three main business segments. The Aerospace & Defense segment generates revenue by providing filtration and fluid control products for commercial aerospace and military applications. The Utility Solutions Group (USG) segment earns income by offering advanced metering infrastructure (AMI) and other communication systems to utilities, focusing on improving operational efficiency and resource management. The RF Shielding & Test segment contributes to revenue by supplying RF shielding and electromagnetic compatibility (EMC) test solutions to various industries. Esco Technologies' earnings are bolstered by strategic acquisitions, continuous innovation, and maintaining strong relationships with key clients and partners in their respective sectors.

Esco Technologies Financial Statement Overview

Summary

Esco Technologies presents a robust financial profile with strong growth in revenue and profitability, coupled with a solid balance sheet and healthy cash flow generation. The company maintains low leverage and demonstrates effective cost and cash flow management, positioning it well for future growth. Potential risks are mitigated by its strong equity base and prudent financial strategies.

Income Statement

Esco Technologies has shown strong revenue growth with a 10.34% increase from the previous year. The gross profit margin is robust at 52.9%, indicating efficient cost management. The net profit margin has improved to 10.4%, reflecting enhanced profitability. Both EBIT and EBITDA margins are strong, at 26.9% and 15.7% respectively, highlighting effective operational performance.

Balance Sheet

The company's balance sheet reflects a solid equity position with an equity ratio of 70.8%. The debt-to-equity ratio is low at 0.10, suggesting low financial leverage and reduced risk of financial distress. Return on equity is a healthy 8.7%, demonstrating satisfactory returns for shareholders.

Cash Flow

Esco Technologies exhibits a strong cash flow position with a notable free cash flow growth rate of 20.76%. The operating cash flow to net income ratio is 1.39, pointing to efficient cash generation from operations. The free cash flow to net income ratio stands at 1.00, supporting a balanced cash flow profile.

Breakdown
TTM	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Income Statement		Total Revenue
1.06B	1.03B	956.03M	857.50M	715.44M	732.91M
	Gross Profit
409.67M	404.02M	375.66M	332.05M	270.39M	275.50M
	EBIT
125.75M	129.89M	145.55M	111.29M	82.93M	87.07M
	EBITDA
211.38M	200.54M	178.24M	159.63M	124.97M	132.20M
	Net Income Common Stockholders
110.19M	101.88M	92.55M	82.32M	63.50M	25.46M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
22.93M	65.96M	41.87M	97.72M	56.23M	52.56M
	Total Assets
896.85M	1.84B	1.68B	1.65B	1.58B	1.37B
	Total Debt
170.36M	156.81M	138.55M	177.85M	182.03M	79.15M
	Net Debt
147.44M	90.85M	96.69M	80.13M	125.80M	26.59M
	Total Liabilities
376.72M	601.27M	552.07M	606.30M	557.65M	411.93M
	Stockholders Equity
520.13M	1.24B	1.13B	1.05B	1.02B	961.60M
Cash Flow		Free Cash Flow
110.30M	91.38M	42.12M	90.26M	87.65M	41.15M
	Operating Cash Flow
152.97M	127.54M	76.89M	135.28M	123.14M	82.28M
	Investing Cash Flow
-45.47M	-104.64M	-52.47M	-55.92M	-202.44M	140.95M
	Financing Cash Flow
-85.37M	-773.00K	-78.33M	-32.12M	81.47M	-236.22M

Esco Technologies Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 151.92
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ESE, the sentiment is Positive. The current price of 151.92 is below the 20-day moving average (MA) of 156.21, below the 50-day MA of 155.56, and above the 200-day MA of 133.84, indicating a neutral trend. The MACD of 0.94 indicates Positive momentum. The RSI at 50.03 is Neutral, neither overbought nor oversold. The STOCH value of 34.03 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ESE.

Esco Technologies Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ESE	80 Outperform	$3.67B	33.39	9.22%	0.22%	8.94%	18.56%
OSIS	75 Outperform	$3.21B	24.58	16.85%	―	20.69%	17.89%
SANM	74 Outperform	$3.84B	17.24	10.55%	―	-8.92%	-12.11%
PLXS	73 Outperform	$3.37B	28.86	9.27%	―	-3.53%	-3.90%
MKSI	68 Neutral	$4.94B	26.04	7.93%	1.50%	-0.99%	―
LFUS	58 Neutral	$3.96B	40.00	4.62%	1.84%	-7.28%	-56.46%
Sector *	57 Neutral	$18.45B	9.41	-13.97%	2.74%	5.04%	-23.56%

Esco Technologies Corporate Events

Esco Technologies Reports Strong Start to Fiscal 2025

At the 2025 Annual Meeting held on February 4, 2025, all director nominees were elected, executive compensation was approved, and Grant Thornton LLP was retained as the auditor. ESCO Technologies reported a robust start to fiscal 2025 with a 13% sales increase in Q1 to $247 million, a 54% rise in GAAP EPS, and significant growth across its segments. The company raised its full-year earnings guidance due to strong market conditions and operational improvements, and anticipates closing the Signature Management & Power acquisition to expand its Navy business.