Key Tronic Corporation (KTCC) | Investment Case

1. Company Snapshot

1.a. Company Description

Key Tronic Corporation provides contract manufacturing services to original equipment manufacturers in the United States and internationally.The company offers integrated electronic and mechanical engineering, assembly, sourcing and procurement, logistics, and new product testing services.Its services include product design; surface mount technologies and pin through hole capability for printed circuit board assembly; tool making; precision plastic molding; sheet metal fabrication and painting; liquid injection molding; complex assembly; automated tape winding; prototype design; and full product assembly services.

The company also manufactures and sells keyboards and other input devices.It markets its products and services primarily through field sales people and distributors.Key Tronic Corporation was incorporated in 1969 and is headquartered in Spokane Valley, Washington.

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1.b. Last Insights on KTCC

Key Tronic Corporation's recent performance was driven by strategic expansions and cost-saving initiatives. The company's new manufacturing facility in Springdale, Arkansas, celebrated its grand opening, marking a significant milestone in its growth strategy. Additionally, cost cuts, new contracts, and the U.S.-Vietnam expansion are expected to boost long-term growth outlook. The company's Q4 2025 earnings call highlighted its efforts to address weaker demand and tariff pressures. A focus on electronic manufacturing services (EMS) and efforts to enhance operational efficiency are underway.

1.c. Company Highlights

Last Price	2.88
Change Percentage	1.77%
Open	2.86
Previous Close	2.83
Market Cap ( Millions)	31
Volume	535
Year High	3.7
Year Low	2.21
M A 50	2.86
M A 200	2.96

FCF Yield	37.13%
Dividend Yield	0.00%
ROE	-13.42%
Debt / Equity	134.12%
Net Debt / EBIDTA	-1484.38%
Price To Book	0.29
Price Earnings Ratio	-2.03
Price To FCF	2.69
Price To sales	0.07
EV / EBITDA	-18.12

2. Key Tronic's Earnings Miss Expectations Amidst Global Uncertainties

Key Tronic Corporation reported total revenue of $96.3 million for fiscal 2026, a decline of 15.5% compared to $113.9 million in the same period of fiscal 2025. The company's gross margin was 0.6%, and operating margin was negative 10.7%, compared to 6.8% and negative 1% respectively, in the same period of fiscal 2025. The net loss was $8.6 million or $0.79 per share for fiscal 2026, wider than the net loss of $4.9 million or $0.46 per share for the same period of fiscal 2025. The adjusted net income was breakeven, or $0 per share for fiscal 2026.

Publication Date: Mar -02

                                    📋 Highlights
                                    Revenue Decline:
                                                Total revenue dropped to $96.3M in 2026 from $113.9M in 2025, driven by reduced demand from a key customer and end-of-life program transitions.
Margin Pressure:
                                                Gross margin fell to 0.6% (vs. 6.8% prior), with operating margin at -10.7% (vs. -1%), but adjusted gross margin improved to 7.9% excluding restructuring charges.
Net Loss Expansion:
                                                Net loss widened to $8.6M ($0.79/share) in 2026 vs. $4.9M ($0.46/share) in 2025, though adjusted net income breakeven vs. -$4.1M ($0.38/share) prior.
New Program Wins:
                                                Secured $5M (Mexico), $5M (US), and $2M (Vietnam) programs in automotive, pest control, and industrial equipment, supported by consigned materials in Mississippi.
Cost Savings & Rebalancing:
                                                China closure delivers $1.2M quarterly savings, with 50% of manufacturing expected in the US/Vietnam by 2026 to mitigate tariffs and boost efficiency.

                                

Operational Challenges and Restructuring Efforts

The company's revenue decline was primarily driven by reduced demand from a long-standing customer and the transition of an end-of-life program. However, this impact was partially offset by new program wins and an increase in demand from other long-standing customers. As Brett Larsen mentioned, "We've won new programs in automotive technology, pest control, and industrial equipment," which will be manufactured in different locations, including Mexico, Vietnam, and the US.

Tariff Mitigation Strategies and Future Outlook

Key Tronic has been working on tariff mitigation strategies, including its new facility in Vietnam, which offers a lower-cost Asian facility that can eventually replace its China facility. The company also offers its customers a suite of options to mitigate tariffs, including building in the US, Mexico, or Vietnam. The wind-down of the company's China operations is expected to result in $1.2 million in savings per quarter.

Valuation and Growth Prospects

The company's current valuation metrics indicate a challenging financial situation, with a P/E Ratio of -2.03, P/B Ratio of 0.29, and P/S Ratio of 0.07. The EV/EBITDA ratio is -18.12, suggesting significant debt relative to its earnings. Analysts estimate next year's revenue growth at None%, and the actual EPS came out at -$0.21 relative to estimates at -$0.21. The company's ROE is -13.42%, and ROIC is -3.76%, indicating poor profitability.

Conclusion on Financial Health

Despite the challenges, Key Tronic's management is optimistic about the company's future prospects, citing the gradual ramping of new programs and cost and efficiency improvements. The company's efforts to mitigate tariffs and improve its cost structure are expected to drive growth in the US and Vietnam production. However, the current valuation metrics and financial performance suggest a cautious approach is warranted.

3. NewsRoom

Key Tronic Gains Despite Wider Y/Y Q2 Loss as Restructuring Takes Hold

Feb -06

Source:

Key Tronic Corporation (KTCC) Q2 2026 Earnings Call Transcript

Feb -04

Source: seekingalpha.com

Key Tronic Corporation Announces Results for the Second Quarter of Fiscal Year 2026

Feb -03

Source: globenewswire.com

Key Tronic Corporation Announces Second Quarter Reporting Date

Jan -20

Source: globenewswire.com

Reviewing Key Tronic (NASDAQ:KTCC) & Mistras Group (NYSE:MG)

Jan -15

Source: defenseworld.net

Head-To-Head Contrast: Key Tronic (NASDAQ:KTCC) versus Location Based Technologies (OTCMKTS:LBAS)

Jan -11

Source: defenseworld.net

Key Tronic (NASDAQ:KTCC) & Xenonics (OTCMKTS:XNNHQ) Head to Head Analysis

Jan -04

Source: defenseworld.net

Critical Analysis: Key Tronic (NASDAQ:KTCC) and Mistras Group (NYSE:MG)

Jan -03

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (13.00%)

6. Segments

Contract Manufacturing Sales and Services

Expected Growth: 13%

Key Tronic Corporation's 13% growth in Contract Manufacturing Sales and Services is driven by increasing demand for electronic manufacturing services, particularly in the industrial, aerospace, and medical device industries. Additionally, the company's strategic acquisitions, expanded production capacity, and cost-saving initiatives have contributed to its growth.

7. Detailed Products

Electronic Manufacturing Services (EMS)

Key Tronic Corporation provides electronic manufacturing services, including printed circuit board assembly, cable assembly, and full-box build services.

PCBA (Printed Circuit Board Assembly)

Key Tronic offers PCBA services, including surface mount technology, through-hole technology, and mixed technology.

Cable Assembly

Key Tronic provides custom cable assembly services, including wire harnesses, coaxial cables, and fiber optic cables.

Full-Box Build

Key Tronic offers full-box build services, including assembly, testing, and packaging of complete products.

Product Design and Engineering

Key Tronic provides product design and engineering services, including design for manufacturability and design for testability.

Supply Chain Management

Key Tronic offers supply chain management services, including procurement, inventory management, and logistics.

8. Key Tronic Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Key Tronic Corporation is medium due to the availability of alternative products and services in the market.

Bargaining Power Of Customers

The bargaining power of customers for Key Tronic Corporation is low due to the company's strong brand reputation and customer loyalty.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Key Tronic Corporation is medium due to the presence of multiple suppliers in the market.

Threat Of New Entrants

The threat of new entrants for Key Tronic Corporation is high due to the low barriers to entry in the industry.

Intensity Of Rivalry

The intensity of rivalry for Key Tronic Corporation is high due to the presence of multiple competitors in the market.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	50.95%
Debt Cost	9.02%
Equity Weight	49.05%
Equity Cost	11.24%
WACC	10.11%
Leverage	103.89%

11. Quality Control: Key Tronic Corporation passed 2 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Rigetti Computing

A-Score: 4.3/10

Value: 6.0

Growth: 4.8

Quality: 4.5

Yield: 0.0

Momentum: 10.0

Volatility: 0.3

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Fathom Digital

A-Score: 4.1/10

Value: 8.2

Growth: 4.8

Quality: 4.8

Yield: 0.0

Momentum: 6.0

Volatility: 0.7

1-Year Total Return ->

Stratasys

A-Score: 3.7/10

Value: 9.0

Growth: 2.3

Quality: 3.7

Yield: 0.0

Momentum: 4.5

Volatility: 3.0

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Corsair Gaming

A-Score: 3.3/10

Value: 7.0

Growth: 2.7

Quality: 4.5

Yield: 0.0

Momentum: 2.5

Volatility: 3.0

1-Year Total Return ->

Key Tronic

A-Score: 3.1/10

Value: 8.0

Growth: 3.8

Quality: 2.1

Yield: 0.0

Momentum: 0.5

Volatility: 4.0

1-Year Total Return ->

Red Cat Holdings

A-Score: 2.6/10

Value: 6.7

Growth: 3.0

Quality: 2.9

Yield: 0.0

Momentum: 2.5

Volatility: 0.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-5.81%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

10.11%

Key Tronic Corporation - US4931441095

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on KTCC

1.c. Company Highlights

Lower Quality

Less Volatile

Fairly Valued

Stable Momentum

Weak Momentum

Cheaper

Average Growth

Average Quality

Lower Growth

2. Key Tronic's Earnings Miss Expectations Amidst Global Uncertainties

Operational Challenges and Restructuring Efforts

Tariff Mitigation Strategies and Future Outlook

Valuation and Growth Prospects

Conclusion on Financial Health

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (13.00%)

6. Segments

Contract Manufacturing Sales and Services

Expected Growth: 13%

7. Detailed Products

Electronic Manufacturing Services (EMS)

PCBA (Printed Circuit Board Assembly)

Cable Assembly

Full-Box Build

Product Design and Engineering

Supply Chain Management

8. Key Tronic Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Key Tronic Corporation passed 2 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

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

2.88$

Current Price

2.88$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA