Download PDF

1. Company Snapshot

1.a. Company Description

Frequency Electronics, Inc., together with its subsidiaries, designs, develops, manufactures, and sells precision time and frequency control products and components for microwave integrated circuit applications.It operates through two segments, FEI-NY and FEI-Zyfer.The FEI-NY segment offers precision time, frequency generation, and synchronization products and subsystems used in communication satellites, terrestrial cellular telephone, or other ground-based telecommunication stations; and other components and systems for the United States military.


The FEI-Zyfer segment designs, develops, and manufactures products for precision navigation and timing primarily incorporating global positioning system technologies into radar systems, airborne SIGINT/COMINT platforms, information networks, test equipment, military command and control terminals, and satellite ground stations.The company's products are used in commercial, government satellites, secure communications, command, control, communication, computer, intelligence, security and reconnaissance, and electronic warfare applications for the United States government on land, sea, and air-borne platforms.It markets its products directly and through independent sales representative organizations located in the United States, Europe, and Asia.


Frequency Electronics, Inc.was founded in 1961 and is headquartered in Mitchel Field, New York.

Show Full description

1.b. Last Insights on FEIM

Frequency Electronics, Inc.'s recent performance was driven by strong revenue growth, with Q4 and full-year revenues reaching $20.0 million and $69.8 million, respectively. The company's operating income and net income also increased significantly. A $20 million share repurchase authorization was announced, which is a positive event for shareholders. Additionally, the company secured a $3.14 million contract for precision timing and frequency control products. Its products are seeing significant demand, particularly in satellite payload sales, which doubled to $12.1 million.

1.c. Company Highlights

2. Frequency Electronics' Strong Q2 FY2026 Earnings: Backlog Hits Record High

Frequency Electronics, Inc. reported a strong second quarter fiscal 2026, with revenue increasing 24% sequentially to $17.1 million, the third highest quarter of revenue in the past decade. The company's gross margin and gross margin rate decreased compared to the same period in the prior fiscal year due to a change in the mix of high-margin production satellite programs. The actual EPS came out at $0.18, missing estimates of $0.32. Despite this, the company's operating income was $1.7 million, and it remains debt-free with a strong working capital position of approximately $31 million.

Publication Date: Dec -20

📋 Highlights
  • Revenue Surge:: 24% sequential increase to $17.1M in Q2 FY2026, third-highest in a decade.
  • Backlog Growth:: Record $82M backlog, +17% YoY, with >$100M expected soon due to quantum sensing/satellite demand.
  • Defense Dominance:: 69% of revenue from non-space US government/DoD customers, up from 37% YoY.
  • Liquidity Strength:: $31M working capital, 2.6:1 current ratio, and debt-free balance sheet as of Oct 31, 2025.
  • Turbo Product Outlook:: $2-3M FY2026 revenue, scaling to $20M long-term, targeting military drone applications first.

Backlog and Growth Prospects

The company's quarter-end backlog was $82 million, the highest in company history and up 17% since the fiscal year-end in April. Thomas McClelland, President and Chief Executive Officer, stated that the company anticipates seeing backlog north of $100 million in the not too distant future, driven by strong existing business and growth prospects in large and growing end markets such as quantum sensing and proliferated satellites. The defense business is booming, with a strong and growing presence in the defense industry, and is expected to grow sharply for many years to come.

Valuation and Outlook

With a P/E Ratio of 22.33 and an EV/EBITDA of 51.92, the market seems to be pricing in significant growth prospects for Frequency Electronics, Inc. Analysts estimate next year's revenue growth at 9.0%. The company's ROE is 37.87%, indicating strong profitability. The company's liquidity is adequate to meet its operating and investing needs for the next twelve months and the foreseeable future. The Turbo product is expected to contribute significantly to revenue, with initial expectations of a couple of million dollars in the fiscal year and potentially $20 million in the out year.

Operational Highlights

The company is seeing a big uptick in backlog for non-space defense products and anticipates a significant uptick in the space end of things in the near future. Frequency Electronics, Inc. is in a cautious hiring mode in anticipation of the business it expects to receive and is actively looking at its ability to address growth without meaningful incremental spend. The company is optimistic about its growth opportunities, driven by trends in space and defense that are independent of politics.

3. NewsRoom

Card image cap

Frequency Electronics Announces Third Quarter Fiscal 2026 Financial Results Conference Call: Wednesday, March 11, 2026, at 4:30 PM ET

Mar -09

Source: globenewswire.com

Card image cap

Frequency Electronics Soars 50% in 6 Months: Should You Buy the Stock?

Feb -12

Source: zacks.com

Card image cap

Frequency Electronics Inc. Announces a contract award valued at approximately $6.0 million

Jan -27

Source: globenewswire.com

Card image cap

Palantir Seems Boring Now – Buy This Under-the-Radar AI Stock for 2026

Jan -20

Source: 247wallst.com

Card image cap

GatePass Capital LLC Makes New Investment in Frequency Electronics, Inc. $FEIM

Jan -18

Source: defenseworld.net

Card image cap

FEI-Zyfer Announces Contract Awards for Approximately $6.0 Million

Jan -12

Source: globenewswire.com

Card image cap

FEIM Downgraded to Neutral Amid Margin and Cash Headwinds

Dec -22

Source: zacks.com

Card image cap

FEIM Stock Up 29% Despite Q2 Earnings Dip Y/Y on Contract Delays

Dec -17

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (9.72%)

6. Segments

FEI-NY

Expected Growth: 9.5%

Frequency Electronics, Inc. (FEI-NY) exhibits 9.5% growth driven by increasing demand for precision timing and synchronization solutions in 5G networks, satellite communications, and military applications. Additionally, FEI's expansion into adjacent markets, such as data centers and edge computing, contributes to its growth momentum.

FEI-Zyfer

Expected Growth: 10.5%

FEI-Zyfer's 10.5% growth is driven by increasing demand for precision timing and synchronization solutions in 5G networks, military communications, and satellite systems. Additionally, the segment benefits from Frequency Electronics, Inc.'s strong research and development investments, strategic partnerships, and expanding presence in the aerospace and defense industries.

Intersegment

Expected Growth: 9.0%

Frequency Electronics, Inc.'s 9.0% intersegment growth is driven by increasing demand for precision timing and synchronization solutions in the 5G network infrastructure, coupled with growing adoption of satellite-based communication systems. Additionally, the company's strategic investments in research and development have enabled it to capitalize on emerging opportunities in the aerospace and defense sectors.

7. Detailed Products

RF Microwave Products

Frequency Electronics, Inc. designs and manufactures a range of RF microwave products, including oscillators, amplifiers, and synthesizers, used in various applications such as satellite communications, radar systems, and electronic warfare.

Wireless and Satellite Communications

The company provides wireless and satellite communication solutions, including satellite transceivers, modems, and transponders, used in various applications such as satellite-based internet, mobile backhaul, and IoT devices.

Precision Time and Frequency Products

Frequency Electronics, Inc. offers a range of precision time and frequency products, including atomic clocks, time standards, and frequency standards, used in various applications such as telecommunications, navigation, and scientific research.

Custom and OEM Solutions

The company provides custom and OEM solutions, including design, development, and manufacturing of custom RF and microwave components, used in various applications such as aerospace, defense, and industrial automation.

8. Frequency Electronics, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Frequency Electronics, Inc. faces moderate threat from substitutes due to the availability of alternative products and services in the market.

Bargaining Power Of Customers

Frequency Electronics, Inc. has a diverse customer base, which reduces the bargaining power of individual customers.

Bargaining Power Of Suppliers

Frequency Electronics, Inc. relies on a few key suppliers for critical components, which gives them some bargaining power.

Threat Of New Entrants

The market for Frequency Electronics, Inc.'s products is highly competitive, and new entrants can easily enter the market with innovative products.

Intensity Of Rivalry

The market for Frequency Electronics, Inc.'s products is highly competitive, with many established players, leading to intense rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 18.84%
Debt Cost 6.18%
Equity Weight 81.16%
Equity Cost 6.18%
WACC 6.18%
Leverage 23.22%

11. Quality Control: Frequency Electronics, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Frequency Electronics

A-Score: 5.6/10

Value: 3.3

Growth: 5.3

Quality: 8.4

Yield: 5.0

Momentum: 10.0

Volatility: 1.7

1-Year Total Return ->

View Full Report
Stock-Card
Digi

A-Score: 5.1/10

Value: 3.2

Growth: 6.8

Quality: 7.3

Yield: 0.0

Momentum: 8.0

Volatility: 5.3

1-Year Total Return ->

View Full Report
Stock-Card
ClearOne

A-Score: 4.2/10

Value: 8.1

Growth: 2.1

Quality: 3.5

Yield: 5.0

Momentum: 6.0

Volatility: 0.3

1-Year Total Return ->

View Full Report
Stock-Card
Knowles

A-Score: 3.9/10

Value: 2.8

Growth: 1.4

Quality: 6.0

Yield: 0.0

Momentum: 7.0

Volatility: 6.3

1-Year Total Return ->

View Full Report
Stock-Card
Clearfield

A-Score: 3.6/10

Value: 3.0

Growth: 4.7

Quality: 4.5

Yield: 0.0

Momentum: 6.0

Volatility: 3.7

1-Year Total Return ->

View Full Report
Stock-Card
Iteris

A-Score: 3.6/10

Value: 1.9

Growth: 7.0

Quality: 5.3

Yield: 0.0

Momentum: 6.0

Volatility: 1.3

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

54.15$

Current Price

54.15$

Potential

-0.00%

Expected Cash-Flows