Espey Mfg. & Electronics Corp. (ESP) stock analysis

Price (20 Oct 26): $53.28
Price target (12m): $78.40
DCF check: $59.85
Scenario value*: $74.13
Bear/Base/Bull: 39.49/78.42/100.18
Market cap: $161.8M
Enterprise value: $116.4M
Free float: 94.5% of S/O
Avg daily vol, 3m: 30k / $1.8M
Institutional own.: 35.4%
Largest holder: BlackRock (largest 13F filer), 3.8%
Insider and board: 5.5%

*Probability-weighted, 25/50/25, over 12 months. Price target is the base case, rounded to the nearest ten cents.

The thesis

The backlog already covers next year's sales, so the risk sits in the order book, not in shipments. Backlog was $134.9M at 30 June 2026, 2.9x FY2026 revenue. But FY2026 orders were a book-to-bill of 0.9x, so the backlog is being drawn down.
Margins stepped up in FY2026, and we do not assume they rise further. Gross margin rose to 35.3% from 28.9%, and operating income plus depreciation reached $12.1M, against $4.8M in FY2023. Our base case holds the FY2026 margin flat.
Net cash is more than a quarter of the market value, though much of it is customer money. Espey has no debt and held $19.4M of cash plus $26.0M of investment securities at 30 June 2026. Customer advances of $31.0M equal 68.2% of the cash pile.
The stock trades well below its peers on the same flat earnings. Espey trades at 9.6x trailing EBITDA, against a 15.5x median for five power-electronics and defense hardware peers. We value FY2027E EBITDA at that median for a $78.40 target, with no revenue growth in the base case.

The full report

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Published by LALC Capital, a separate company. Opinion, not personal advice. Disclosures

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A rating such as BUY, a price target, or a pick such as Microcap of the Day is LALC Capital's published opinion on the date shown. It is general research for information only, not personal investment advice, and it does not take account of any reader's circumstances. Figures are drawn from public filings and may contain errors. Please consult an accredited financial adviser before making any investment decision. See the disclosures.