Transcat (TRNS) AI Stock Analysis

• Market Cap: $683.13M
• Dividend Yield: N/A
• Average Volume (3M): 73.62K
• Price to Earnings (P/E): 39.6
• Beta (1Y): 1.17
• Revenue Growth: 8.60%
• EPS Growth: 42.67%
• Country: US
• Employees: 1,104
• Sector: Industrials
• Sector Strength: 65
• Industry: Industrial - Distribution
• EPS (TTM): 1.85
• Shares Outstanding: 9,309,470
• 10 Day Avg. Volume: 56,181
• 30 Day Avg. Volume: 73,616
• PEG Ratio: 0.93
• Price to Book (P/B): N/A
• Price to Sales (P/S): 3.15
• Price to Cash Flow (P/CF): 12.80
• P/FCF Ratio: 16.50
• 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: $100.00
• Price Target Upside: 34.32% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3

The overall stock score is influenced by strong financial performance and strategic acquisitions, offset by bearish technical indicators and high valuation metrics. The company's ability to maintain revenue growth and manage liabilities remains a strength, but current market conditions and valuation suggest cautious optimism.

Positive Factors

Future Growth Prospects

Management laid out a series of changes that should return the Nexa unit to growth by first half FY26, leveraging Transcat’s strong reputation.

Mergers and Acquisitions

The company's December acquisition of Martin Calibration Inc. is expected to contribute as much as $25.0M of annual revenue, before any benefit from cross-selling services.

Stock Valuation

TRNS shares are valued at $106, representing approximately 20.0% upside from recent trading levels, with a premium multiple seen as warranted.

Negative Factors

Market Competition

Shares are expected to face some downward pressure due to trading at a valuation near the top of the peer group and increased competition from web-based retailers.

Operating Results

Shares of Transcat, Inc. traded lower, down 12.7% following the second consecutive quarter of softer than expected operating results.

Organic Growth

The miss to our forecast was the result of lower-than-expected organic growth within the Services segment, driven by a material slowdown in Nexa’s cost control and optimization services business.

Transcat Business Overview & Revenue Model

Company Description

Transcat, Inc. provides calibration and laboratory instrument services in the United States, Canada, and internationally. It operates through two segments, Service and Distribution. The Service segment offers calibration, repair, inspection, analytical qualification, preventative maintenance, consulting, and other related services. This segment also provides CalTrak, a proprietary document and asset management software that is used to integrate and manage the workflow of its calibration service centers and customers' assets; and Compliance, Control and Cost, an online customer portal that provides its customers with web-based asset management capability, as well as a safe and secure off-site archive of calibration and other service records. The Distribution segment sells and rents test, measurement, and control instruments for customers' test and measurement instrumentation needs, as well as value added services, such as calibration/certification of equipment purchase, equipment rental, used equipment for sale, and equipment kitting. This segment markets and sells its products through website, digital and print advertising, proactive outbound sales, and an inbound call center. The company provides services and products to highly regulated industries, principally life science, which includes companies in the pharmaceutical, biotechnology, medical device, and other FDA-regulated industries; and additional industries, including aerospace and defense industrial manufacturing, energy and utilities, and other industries that require accuracy in processes and confirmation of the capabilities of their equipment. Transcat, Inc. was incorporated in 1964 and is headquartered in Rochester, New York.

How the Company Makes Money

Transcat generates revenue through two main segments: Service and Distribution. The Service segment, which is the larger of the two, provides calibration, repair, inspection, and laboratory instrument services. This segment focuses on helping clients maintain compliance with regulatory standards and ensuring operational efficiency. The Distribution segment sells and rents a wide range of test, measurement, and control instrumentation from leading manufacturers. Transcat's strategic partnerships with manufacturers and its extensive catalog of products enhance its ability to meet a diverse range of customer needs across various industries. Additionally, the company's recurring service contracts and growing customer base contribute significantly to its revenue stability and growth.

Transcat Financial Statement Overview

Summary

Transcat exhibits commendable financial health with strong revenue growth, efficient operations, and robust cash flow management. The company demonstrates operational efficiency and profitability, supported by a solid balance sheet with manageable debt levels. Continued focus on revenue growth and liability management augurs well for future stability.

Income Statement

Transcat shows strong revenue growth with a consistent increase over the years. The TTM (Trailing-Twelve-Months) revenue increased by 4.92% compared to the previous year. Gross profit margin and net profit margin are healthy at 32.16% and 6.22%, respectively. The EBIT margin of 7.40% and EBITDA margin of 8.31% also indicate efficient operational management. There is a positive trend in net income, showcasing profitability improvements.

Balance Sheet

The company maintains a relatively stable balance sheet with an improving equity position. The debt-to-equity ratio has decreased over the years, reaching 0.22 in the TTM period, indicating lower leverage. The return on equity (ROE) is solid at 6.03%, showing effective use of shareholders' funds. The equity ratio stands at 72.83%, reflecting a strong reliance on equity financing. However, the increase in total liabilities needs monitoring.

Cash Flow

Transcat displays robust cash flow management with a significant positive operating cash flow to net income ratio of 2.01, indicating efficient cash generation from operations. The free cash flow has grown, contributing to a healthy cash flow position. The free cash flow to net income ratio of 1.15 further supports the company's strong cash flow capabilities. The company has effectively managed its capital expenditures.

Breakdown
TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Income Statement		Total Revenue
272.20M	259.48M	230.57M	204.96M	173.34M	173.10M
	Gross Profit
87.57M	83.81M	68.36M	58.44M	46.12M	42.48M
	EBIT
20.97M	19.78M	16.25M	14.14M	11.07M	10.85M
	EBITDA
35.55M	33.82M	27.39M	24.61M	18.65M	17.51M
	Net Income Common Stockholders
16.94M	13.65M	10.69M	11.38M	7.79M	8.07M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
123.00K	35.18M	1.53M	1.40M	560.00K	499.00K
	Total Assets
35.71M	287.55M	195.75M	177.76M	132.12M	128.12M
	Total Debt
2.53M	21.54M	62.08M	57.65M	27.52M	37.18M
	Net Debt
2.41M	1.89M	60.55M	56.25M	26.96M	36.68M
	Total Liabilities
15.46M	62.38M	96.12M	91.59M	57.04M	61.03M
	Stockholders Equity
20.26M	225.17M	99.63M	86.18M	75.08M	67.09M
Cash Flow		Free Cash Flow
19.40M	19.34M	7.54M	7.47M	17.02M	5.00M
	Operating Cash Flow
34.08M	32.62M	16.95M	17.62M	23.64M	11.56M
	Investing Cash Flow
-99.61M	-41.67M	-18.51M	-39.85M	-10.15M	-20.24M
	Financing Cash Flow
34.63M	27.40M	876.00K	23.69M	-12.65M	8.25M

Transcat Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 74.45
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TRNS, the sentiment is Neutral. The current price of 74.45 is above the 20-day moving average (MA) of 72.31, below the 50-day MA of 79.63, and below the 200-day MA of 107.66, indicating a neutral trend. The MACD of -2.16 indicates Negative momentum. The RSI at 48.33 is Neutral, neither overbought nor oversold. The STOCH value of 92.00 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TRNS.

Transcat Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AME	76 Outperform	$39.32B	28.75	14.97%	0.66%	5.22%	4.46%
RBC	73 Outperform	$10.24B	44.67	8.35%	―	4.62%	21.58%
FLR	72 Outperform	$6.08B	2.96	72.85%	―	5.43%	2094.12%
TTEK	71 Outperform	$7.81B	30.43	16.05%	0.80%	11.02%	11.33%
AOS	63 Neutral	$9.42B	18.08	28.63%	2.01%	-0.90%	-1.69%
Sector *	62 Neutral	$8.05B	13.60	4.04%	3.11%	3.70%	-14.19%
TRNS	57 Neutral	$683.13M	39.58	6.78%	―	8.60%	42.67%

Transcat Corporate Events

Transcat Secures Executive Stability Amid Ownership Changes

Transcat, Inc. has entered into severance agreements with key executives, which provide compensation and benefits in the event of a change in control and subsequent termination. These agreements aim to ensure stability and continuity for the executives if the company undergoes significant ownership changes, potentially impacting their roles.