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OSI Systems (OSIS)
:OSIS
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OSI Systems
(NASDAQ:OSIS)
72Outperform
Positive Factors
Financial Performance
The company experienced a beat in the first quarter and raised its guidance, indicating strong performance.
Market Leadership
OSI is the top player in the market for cargo and vehicle scanning equipment with over 50% share.
Negative Factors
Valuation Concerns
The stock is up 28% YTD versus 4% for the S&P 500, and valuation is nicely above the historical average, so analysts are inclined to be patient.
OSI Systems (OSIS) vs. S&P 500 (SPY)
Market Cap
$3.03B
Dividend YieldN/A
Average Volume (3M)228.56K
Price to Earnings (P/E)23.4
Beta (1Y)1.44
Revenue Growth20.69%
EPS Growth17.89%
CountryUS
Employees6,681
SectorTechnology
Sector Strength45
IndustryHardware & Equipment
Share Statistics
EPS (TTM)7.78
Shares Outstanding16,799,282
10 Day Avg. Volume310,819
30 Day Avg. Volume228,560
Financial Highlights & Ratios
PEG Ratio1.31
Price to Book (P/B)N/A
Price to Sales (P/S)1.84
Price to Cash Flow (P/CF)14.40
P/FCF Ratio17.90
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$222.80Price Target Upside22.65% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering5
OSI Systems Business Overview & Revenue Model
Company DescriptionOSI Systems, Inc. is an integrated designer and manufacturer of specialized electronic systems and components for critical applications. The company operates through the following segments: Security, Healthcare, and Optoelectronics & Manufacturing. The Security segment provides security inspection systems and related services, and turnkey security screening solutions. The Healthcare segment provides patient monitoring, diagnostic cardiology and related services. The Optoelectronics and Manufacturing segment provides electronic components and electronic manufacturing services for Security and Healthcare divisions as well as to external original equipment manufacturer customers and end users for applications in the defense, aerospace, medical and industrial markets, among others. OSI Systems was founded by Deepak Chopra in May 1987 and is headquartered in Hawthorne, CA.
How the Company Makes MoneyOSI Systems generates revenue primarily through the sale of its products and services within its three business segments. The Security segment provides security screening systems, turnkey security screening solutions, and related services to airports, ports, and border crossings, contributing significantly to the company's revenue. The Healthcare segment earns revenue by offering patient monitoring, cardiology, and anesthesia delivery systems to hospitals and medical facilities. The Optoelectronics and Manufacturing segment generates income through the production of various components and subsystems for use in defense, aerospace, medical, and industrial applications. Additionally, OSI Systems benefits from long-term service agreements, maintenance contracts, and strategic partnerships with governmental and private entities worldwide, which further bolster its earnings.
OSI Systems Financial Statement Overview
Summary
OSI Systems demonstrates strong financial performance with consistent revenue growth and solid profitability, reflected in a 29% revenue increase and healthy margins. However, cash flow challenges with negative operating and free cash flow highlight areas needing improvement.Income Statement
OSI Systems demonstrates strong financial performance with consistent revenue growth, evident from a 29% increase from 2023 to TTM (Trailing-Twelve-Months). The gross profit margin is healthy at 33.5%, and the net profit margin has improved to 8.2% in the TTM period. The EBIT and EBITDA margins also reflect solid profitability at 12.6% and 14.4%, respectively. However, the company should remain vigilant about maintaining these margins amidst industry volatility.85
Very Positive
Balance Sheet
The balance sheet indicates a robust equity position with a debt-to-equity ratio of 0.01, signifying low leverage. The equity ratio stands at 38.8%, showcasing financial stability. Although the return on equity (ROE) is decent at 16.3%, the decline in stockholders' equity from 2023 suggests a need to monitor equity performance closely.75
Positive
Cash Flow
Cash flow analysis highlights challenges in cash generation, with a negative operating cash flow of -$65.7 million in the TTM period. The company also reported negative free cash flow. While the operating cash flow to net income ratio is concerning, the firm is actively managing financing activities, likely to support operations and investments.60
Neutral
| Breakdown | |||||
| TTM | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 1.65B | 1.54B | 1.28B | 1.18B | 1.15B | 1.17B | Gross Profit |
| 552.93M | 530.46M | 430.51M | 424.43M | 419.92M | 420.64M | EBIT |
| 207.92M | 189.06M | 135.28M | 121.75M | 81.62M | 61.61M | EBITDA |
| 237.17M | 230.72M | 173.79M | 167.97M | 159.23M | 154.65M | Net Income Common Stockholders |
| 134.48M | 128.15M | 91.78M | 115.35M | 74.05M | 75.25M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 101.63M | 95.35M | 76.75M | 64.20M | 80.61M | 76.10M | Total Assets |
| 2.13B | 1.94B | 1.56B | 1.44B | 1.38B | 1.27B | Total Debt |
| 8.20M | 521.55M | 359.57M | 353.24M | 277.27M | 327.00M | Net Debt |
| -93.43M | 426.20M | 282.82M | 289.04M | 196.65M | 250.90M | Total Liabilities |
| 1.31B | 1.07B | 829.52M | 804.73M | 744.55M | 696.39M | Stockholders Equity |
| 825.83M | 863.48M | 726.16M | 638.42M | 639.82M | 572.15M |
| Cash Flow | Free Cash Flow | ||||
| -88.10M | -126.93M | 62.56M | 33.32M | 109.56M | 95.43M | Operating Cash Flow |
| -65.73M | -87.50M | 94.81M | 63.81M | 139.07M | 129.18M | Investing Cash Flow |
| -113.39M | -37.64M | -40.46M | -12.67M | -34.69M | -42.69M | Financing Cash Flow |
| 156.38M | 144.25M | -37.17M | -64.01M | -103.92M | -104.73M |
OSI Systems Technical Analysis
Neutral
181.66
Price Trends
188.11
Negative
174.28
Positive
158.52
Positive
Market Momentum
-3.69
Positive
37.35
Neutral
12.28
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For OSIS, the sentiment is Neutral. The current price of 181.66 is below the 20-day moving average (MA) of 198.90, below the 50-day MA of 188.11, and above the 200-day MA of 158.52, indicating a neutral trend. The MACD of -3.69 indicates Positive momentum. The RSI at 37.35 is Neutral, neither overbought nor oversold. The STOCH value of 12.28 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for OSIS.
OSI Systems Risk Analysis
OSI Systems disclosed 49 risk factors in its most recent earnings report. OSI Systems reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
OSI Systems Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $3.03B | 23.36 | 16.85% | ― | 20.69% | 17.89% | |
71 Outperform | $39.98B | 27.66 | 7.85% | 2.13% | 9.82% | 22.33% | |
61 Neutral | $2.58B | ― | -6.10% | ― | -1.21% | -4.63% | |
58 Neutral | $21.35B | 9.96 | -19.72% | 2.38% | 5.03% | -22.83% | |
52 Neutral | $4.44B | 272.61 | 1.40% | ― | 9.57% | ― |
* Technology Sector Average
Performance Comparison
OSIS
OSI Systems
181.66
51.96
40.06%
LHX
L3Harris Technologies
208.95
-2.43
-1.15%
KTOS
Kratos Defense
29.60
12.06
68.76%
MRCY
Mercury Systems
42.10
12.25
41.04%
OSI Systems Earnings Call Summary
Earnings Call Date: Jan 23, 2025 | % Change Since: 7.48% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Positive
The earnings call presented a strong performance with record revenues and significant growth in key divisions, particularly the Security and Optoelectronics segments. The company's robust backlog and increased fiscal guidance indicate confidence in future growth. While there were some margin pressures and challenges in the Healthcare division's profitability, the overall outlook remains positive.Highlights
Record Q2 Revenues and Growth
Revenues increased 12% year-over-year to a Q2 record of $420 million, with the Security division experiencing a 16% growth. The company also reported record Q2 non-GAAP adjusted earnings per share of $2.42.
Strong Backlog and Book-to-Bill Ratio
The company finished the quarter with a record backlog of more than $1.8 billion and a book-to-bill ratio of 1.2, indicating strong future revenue visibility.
Significant Orders in Security Division
The company received several significant orders, including a $27 million aviation security contract, an $81 million order for mobile cargo inspection systems, and a $32 million order for border security applications.
Optoelectronics Division Growth
Optoelectronics achieved a quarterly record with $101 million in revenues, driven by significant orders from healthcare OEMs and the relocation of manufacturing away from China.
Improved Operating Cash Flow
The company generated $53 million in operating cash flow, a $76 million improvement over the same quarter last year, driven by strong profits and improved working capital metrics.
Increased Fiscal 2025 Guidance
The company raised its fiscal 2025 revenue guidance to $1.685 billion to $1.710 billion and non-GAAP adjusted EPS to $9.10 to $9.40, representing 11.9% to 15.6% growth.
Lowlights
Security Division Margin Pressure
The adjusted operating margin in the Security division was down year-over-year, although it was the second strongest in the division's history.
Healthcare Division Profitability
Although seeing growth, the Healthcare division's profitability improved less than expected, presenting an area for potential improvement.
Company Guidance
During the OSI Systems Q2 2025 earnings call, the company reported a 12% year-over-year revenue increase to a record $420 million, driven by a 16% rise in the Security division's revenues. The Optoelectronics division also performed well, achieving a quarterly record of $101 million in revenues. The company's non-GAAP adjusted earnings per share reached $2.42, and they ended the quarter with a record backlog exceeding $1.8 billion, supported by a robust book-to-bill ratio of 1.2. Operating cash flow for the quarter was $53 million, marking a $76 million increase from the previous year. OSI Systems also raised its fiscal 2025 revenue guidance to a range of $1.685 billion to $1.710 billion and its non-GAAP adjusted earnings per share guidance to $9.10 to $9.40, signifying growth expectations of 9.5% to 11.1% in revenues and 11.9% to 15.6% in EPS.OSI Systems Corporate Events
Executive/Board ChangesShareholder Meetings
OSI Systems Expands Board and Appoints New CEO
Neutral
Dec 13, 2024
OSI Systems, Inc. has expanded its Board of Directors to seven members, appointing Ajay Mehra as a new director effective January 1, 2025. Ajay Mehra will also assume the roles of President and CEO with a starting salary of $750,000. The company has outlined specific terms in Mr. Mehra’s employment agreement regarding his compensation and benefits upon termination. Additionally, OSI Systems held its Annual Meeting of Stockholders where all six nominated directors were elected, and Grant Thornton LLP’s appointment as the independent registered public accounting firm was ratified.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.