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1. Company Snapshot

1.a. Company Description

OSI Systems, Inc.designs and manufactures electronic systems and components worldwide.It operates in three segments: Security, Healthcare, and Optoelectronics and Manufacturing.


The Security segment offers baggage and parcel inspection, cargo and vehicle inspection, hold baggage and people screening, radiation detection, and explosive and narcotics trace detection systems under the Rapiscan Systems, AS&E, and Gatekeeper names.It also provides site design, installation, training, and technical support services; and security screening solutions under the S2 name.The Healthcare segment offers patient monitoring and diagnostic cardiology systems, and related supplies and accessories under the Spacelabs name for use in critical care, emergency, and perioperative areas within hospitals, physicians' offices, medical clinics, and ambulatory surgery centers.


The Optoelectronics and Manufacturing segment provides optoelectronic devices under the OSI Optoelectronics, OSI LaserDiode, OSI Laserscan, Semicoa, and Advanced Photonix names for the aerospace and defense, avionics, medical imaging and diagnostics, biochemistry analysis, pharmaceutical, nanotechnology, telecommunications, construction, and homeland security markets.It also offers electronics manufacturing services to original equipment manufacturers and end users for medical, automotive, defense, aerospace, industrial, and consumer applications under the OSI Electronics, APlus Products, Altaflex, and PFC names; and LCD displays for medical, industrial, and consumer electronics applications, as well as flex circuits for OEM customers.This segment offers laser-based remote sensing devices to detect and classify vehicles in toll and traffic management systems under the OSI Laserscan and Autosense names; and solid-state laser products for aerospace, defense, telecommunication, and medical applications under the OSI LaserDiode name.


The company was incorporated in 1987 and is headquartered in Hawthorne, California.

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1.b. Last Insights on OSIS

Breaking News: OSI Systems Inc recently drew attention as investors weigh its value against CTS in the Electronics - Miscellaneous Components sector. The comparison comes as both companies are considered for potential investment opportunities. No recent earnings release was provided but investors are evaluating OSI Systems alongside CTS to determine which stock offers better value. Analysts and investors are currently assessing the companies based on their financials and market standing to make informed decisions. Recommendations from analysts vary with some considering a buy while others advise to hold.

1.c. Company Highlights

2. OSI Systems' Q2 Results Exceed Expectations

OSI Systems reported a strong Q2 with revenues increasing 11% year-over-year to a record $464 million. The Security division achieved double-digit revenue growth, driven by increases in product and service revenues, with revenue rising 15% to $335 million. The company's non-GAAP adjusted EPS reached a record $2.58, beating estimates of $2.52. The Optoelectronics and Manufacturing division also delivered double-digit top-line growth, with revenues up 12% to $113 million. The company's operating cash flow was $62 million, and it has a solid balance sheet with a net leverage of approximately 2.2.

Publication Date: Feb -15

📋 Highlights
  • Record Revenue Growth:: Q2 revenue hit $464 million, up 11% YoY, driven by Security ($335 million, +15%) and Optoelectronics ($113 million, +12%) divisions.
  • Margin Expansion Outlook:: Operating margins expected to expand in Q4 due to service revenue growth acceleration and Mexico receivables normalization.
  • Strong Free Cash Flow:: Generated $62 million in operating cash flow, with net leverage at 2.2, and potential for full-year cash flow near or exceeding net income ($10.30–$10.55 non-GAAP EPS guidance).
  • Strategic Investments:: R&D increased to $19.8 million, and new Texas facilities will boost RF production capacity, supporting long-term operational efficiency.
  • Backlog and Market Position:: $1.8 billion backlog and 3–5 year growth in RF security (e.g., Golden Dome program) and international demand, particularly in the Middle East.

Segment Performance

The Security division's growth was driven by increases in product and service revenues. The Optoelectronics division is seeing growth across industries, ranging from medical diagnostics to semiconductors, driven by the breadth of its offerings. The Healthcare division faced a challenging quarter, but the company remains focused on long-term value creation, intensifying sales efforts, and investing in next-generation product development.

Guidance and Outlook

For fiscal 2016, OSI Systems raised its non-GAAP EPS guidance to $10.30 to $10.55, representing 10% to 13% year-over-year growth, while maintaining its revenue guidance. The company expects a strong second half of fiscal 2016, with growth in Q4 expected to be significantly stronger than in Q3. The guidance outlook for margins is positive, with service revenue growth expected to continue at a much faster rate than product revenue, driving operating margin expansion.

Valuation

With a P/E Ratio of 29.36 and an EV/EBITDA of 19.4, the company's valuation appears to be pricing in a significant amount of growth. Analysts estimate next year's revenue growth at 5.5%. The company's ROIC is 9.06%, and ROE is 16.91%, indicating a relatively efficient use of capital. The Net Debt / EBITDA ratio is 2.54, which is manageable given the company's cash flow generation capabilities.

Operational Highlights

The company is investing in innovation, with R&D expenses up from $18.3 million to $19.8 million, and is focused on driving operational excellence and long-term value creation. OSI Systems also announced a $20 million award to deliver a radiological threat detection solution to an international customer and was selected to support security screening at a major global sporting event in Europe.

Cash Flow and Share Buyback

3. NewsRoom

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CTS or OSIS: Which Is the Better Value Stock Right Now?

Mar -06

Source: zacks.com

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OSI Systems, Inc. (OSIS) Presents at Morgan Stanley Technology, Media & Telecom Conference 2026 Transcript

Mar -05

Source: seekingalpha.com

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OSI Systems to Present at Morgan Stanley Technology, Media & Telecom Conference

Mar -03

Source: businesswire.com

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OSI Systems, Inc. (OSIS) Presents at Citi's Global Industrial Tech & Mobility Conference 2026 Transcript

Feb -19

Source: seekingalpha.com

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OSI Systems Receives ECAC/EU G1 Certification of Trace Detection Solutions for Airport Security

Feb -19

Source: businesswire.com

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CTS vs. OSIS: Which Stock Is the Better Value Option?

Feb -18

Source: zacks.com

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OSI Systems to Present at Citi's 2026 Global Industrial Tech and Mobility Conference

Feb -17

Source: businesswire.com

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OSI Systems, Inc. (NASDAQ:OSIS) Receives $282.00 Average Target Price from Analysts

Feb -16

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.68%)

6. Segments

Security

Expected Growth: 10.5%

OSI Systems' 10.5% growth is driven by increasing demand for security screening products, expansion in emerging markets, and strategic acquisitions. The company's focus on innovation, particularly in AI-powered security solutions, has also contributed to its growth. Additionally, the rising need for border security and surveillance systems has boosted demand for OSI's products, further fueling its growth.

Optoelectronics and Manufacturing

Expected Growth: 11.5%

OSI Systems' Optoelectronics and Manufacturing segment's 11.5% growth is driven by increasing demand for optoelectronic devices in security and defense applications, growing adoption of 3D scanning and sensing technologies, and expansion in the automotive and industrial markets. Additionally, the company's strategic acquisitions and investments in research and development have contributed to its growth momentum.

Healthcare

Expected Growth: 10.0%

OSI Systems, Inc.'s Healthcare segment growth of 10.0% is driven by increasing demand for medical imaging and patient monitoring systems, expansion into emerging markets, and strategic partnerships with healthcare providers. Additionally, the company's focus on innovative product development, such as AI-powered diagnostic tools, is expected to contribute to future growth.

7. Detailed Products

Security Screening Systems

OSI Systems' security screening systems are designed to detect and prevent threats in various settings, including airports, government facilities, and public venues.

Turnkey Screening Solutions

Customized screening solutions for high-security facilities, including correctional facilities, courthouses, and government buildings.

Rapiscan Systems

Rapiscan Systems provides security screening products, including X-ray scanners, metal detectors, and explosive trace detection systems.

AS&E Inspection Systems

AS&E Inspection Systems offers non-intrusive inspection systems for cargo, vehicles, and people.

Optical Inspection Systems

Optical inspection systems for wafer and panel inspection in the semiconductor industry.

Medical Imaging Systems

Medical imaging systems for diagnostic and therapeutic applications.

Patient Monitoring Systems

Patient monitoring systems for vital sign monitoring and data analytics.

8. OSI Systems, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

OSI Systems, Inc. operates in a niche market with limited substitutes, but the threat of substitutes is still present due to the evolving technology and changing customer preferences.

Bargaining Power Of Customers

OSI Systems, Inc. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's products are often customized, making it difficult for customers to switch to alternative suppliers.

Bargaining Power Of Suppliers

OSI Systems, Inc. relies on a few key suppliers for critical components, which gives them some bargaining power. However, the company's large scale of operations and diversified supply chain mitigate this risk.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the security and healthcare industries, which require significant investments in research and development, manufacturing, and regulatory compliance.

Intensity Of Rivalry

The security and healthcare industries are highly competitive, with several established players competing for market share. OSI Systems, Inc. faces intense rivalry from companies like Smiths Group and Analogic Corporation.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 33.12%
Debt Cost 7.00%
Equity Weight 66.88%
Equity Cost 8.89%
WACC 8.26%
Leverage 49.52%

11. Quality Control: OSI Systems, Inc. passed 4 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

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Teledyne Technologies

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Value: 3.1

Growth: 6.3

Quality: 6.8

Yield: 0.0

Momentum: 7.0

Volatility: 9.3

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OSI Systems

A-Score: 4.9/10

Value: 2.6

Growth: 5.9

Quality: 7.1

Yield: 0.0

Momentum: 8.5

Volatility: 5.3

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Quality: 4.4

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Quality: 6.4

Yield: 0.0

Momentum: 5.0

Volatility: 7.3

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Badger Meter

A-Score: 4.5/10

Value: 1.2

Growth: 8.0

Quality: 7.2

Yield: 1.0

Momentum: 3.0

Volatility: 6.7

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Plexus

A-Score: 4.2/10

Value: 4.0

Growth: 6.2

Quality: 5.5

Yield: 0.0

Momentum: 3.5

Volatility: 6.0

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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

282.16$

Current Price

282.16$

Potential

-0.00%

Expected Cash-Flows