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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.

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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: Contract Wins Offset Margins, Backlog Growth Signals Future Upside

Frequency Electronics posted third‑quarter revenue of $16.9 million, unchanged from Q2 but down year‑over‑year as prior fiscal 2025 pulled forward earnings. Operating income fell to $1.3 million from $3.5 million, and net income slid to $1.6 million, or $0.16 EPS, versus $15.4 million and $1.60 EPS in the same period a year earlier. Gross margin contracted as the mix shifted toward lower‑margin production satellite programs, a point reiterated by CFO Steven Bernstein. The company’s valuation sits at a lofty P/E of 77.41 and a P/S of 8.29, reflecting the market’s premium for its expanding backlog and high‑growth contracts.

Publication Date: Apr -19

📋 Highlights
  • Revenue Stability and YoY Decline: Q3 2026 revenue remained at $16.9 million, unchanged from Q2, but down YoY due to fiscal 2025's revenue pullforward.
  • Major Contract Awards: Announced $45 million in new contracts: $45 million split between traditional space satellite programs and proliferated satellite projects.
  • Record Backlog Growth: Backlog reached $83 million (end of January), with expectations to exceed $100 million soon due to pending contracts.
  • Profitability Decline: Operating income fell to $1.3 million (from $3.5 million YoY), and net income dropped to $1.6 million ($0.16/share) vs. $15.4 million ($1.60/share).

Revenue and Margin Dynamics

Revenue held steady at $16.9 million, but the decline in gross margin rate reflects the company’s recent shift toward high‑volume, lower‑margin proliferated satellite programs. Operating expenses grew, particularly SG&A, as the firm ramps up investment in Colorado facilities to support the new satellite business line. Despite these headwinds, the gross margin remains above 30% on a weighted‑average basis.

Contract Wins and Backlog Momentum

Management announced two $45 million contract awards—one in traditional satellite programs and one in proliferated constellations—boosting the backlog to a record $83 million. The firm projects backlog to exceed $100 million soon, with additional mid‑six‑figure deals in the pipeline. This surge underpins the company’s near‑term revenue upside, even as current quarter earnings lag.

Proliferated Satellite Strategy

McClelland outlined the proliferated satellite approach, emphasizing lower per‑satellite cost and rapid production cycles. While initial investments will compress margins, the company expects a more continuous and predictable revenue stream once Colorado operations normalize. The strategy complements the higher‑margin traditional satellite business, creating a dual‑track growth engine.

Quantum and Alternative Navigation Growth

Frequency is advancing magnetic navigation and mini‑GPS solutions for environments where GPS is jammed, leveraging development‑fund revenue to seed future product sales. The company also explores a Golden Dome concept that spans missile systems and satellite programs, positioning it across multiple high‑tech defense markets.

Balance Sheet Strength and Liquidity

The firm remains debt‑free with $32 million in working capital and a current ratio of 2.6:1, providing ample liquidity to fund ongoing R&D and capital expenditures. CFO Bernstein noted that the balance sheet should comfortably support the company’s operating and investing needs for the next twelve months.

Forward‑Looking Guidance and Valuation

Management projects a 21.7% revenue growth next fiscal year, driven by the $45 million contracts and expected backlog expansion. While gross margins may stay modest in the short term, the company’s high valuation multiples reflect investor confidence in its diversified portfolio and the potential for long‑term profitability.

3. NewsRoom

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Frequency Electronics Inc. Announces Three-Year Revenue Target of At Least $150 Million

Apr -30

Source: globenewswire.com

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Head-To-Head Survey: Electro-Sensors (NASDAQ:ELSE) vs. Frequency Electronics (NASDAQ:FEIM)

Apr -27

Source: defenseworld.net

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General (Ret.) Lance W. Lord, to Receive Space Foundation Lifetime Space Achievement Award

Apr -14

Source: globenewswire.com

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Frequency Electronics (NASDAQ:FEIM) Stock Crosses Above Two Hundred Day Moving Average – Time to Sell?

Mar -25

Source: defenseworld.net

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FEIM's Q3 Earnings Down Y/Y Due to Margin Pressure, Backlog Grows

Mar -17

Source:

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Frequency Electronics, Inc. (FEIM) Q3 2026 Earnings Call Transcript

Mar -11

Source: seekingalpha.com

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Frequency Electronics Inc. Announces Contract Awards Valued at Approximately $45 million

Mar -11

Source: globenewswire.com

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Frequency Electronics, Inc. Announces Third Quarter and Fiscal Year 2026 Financial Results

Mar -11

Source: globenewswire.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

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A-Score: 5.1/10

Value: 3.2

Growth: 6.8

Quality: 7.3

Yield: 0.0

Momentum: 8.0

Volatility: 5.3

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ClearOne

A-Score: 4.2/10

Value: 8.1

Growth: 2.1

Quality: 3.5

Yield: 5.0

Momentum: 6.0

Volatility: 0.3

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Knowles

A-Score: 3.9/10

Value: 2.8

Growth: 1.4

Quality: 6.0

Yield: 0.0

Momentum: 7.0

Volatility: 6.3

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Clearfield

A-Score: 3.6/10

Value: 3.0

Growth: 4.7

Quality: 4.5

Yield: 0.0

Momentum: 6.0

Volatility: 3.7

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Iteris

A-Score: 3.6/10

Value: 1.9

Growth: 7.0

Quality: 5.3

Yield: 0.0

Momentum: 6.0

Volatility: 1.3

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

57.53$

Current Price

57.53$

Potential

-0.00%

Expected Cash-Flows