What they do
Aviat Networks, based in Austin, Texas, designs, makes and sells microwave and wireless access networking gear, plus the services around it, to communications service providers and private network operators.
Why we picked it
- 01$267.4M
Below book. Shareholders' equity was $267.4M at 3 Jul 2026 against a $250.0M market value at the 14 Oct close, 0.93x book. Enterprise value is 0.62x fiscal 2026 revenue of $439.7M.
- 02$367M
Orders are ahead of sales. Backlog ended fiscal 2026 at $367M, up 14% from $323M, and twelve-month book-to-bill stayed above 1. Q4 North America revenue rose 17.8% to $68.3M.
- 03$50M
Profit is guided up. Management guides fiscal 2027 adjusted EBITDA to $50M to $55M, 36% to 50% above the $36.7M of fiscal 2026, on revenue of $455M to $470M.
- 04$24.2M
The debt is covered. Net debt was $24.2M at year end ($97.0M of debt, $72.8M of cash), 0.66x fiscal 2026 adjusted EBITDA. The company bought back $2.2M of stock in Q4 at an average $16.55.
The risk
The catch: GAAP profit is thin. Gross margin fell to 30.8% in Q4 from 34.2%, Aviat lost $2.1M and $1.3M in the last two quarters, fiscal 2026 net income was $2.5M, and NEC, a 5.7% holder, has an arbitration claim against it that started with a $19M component purchase demand.
The full analysis
Aviat Networks ($AVNW): a growing backlog priced below book
Our view: bullish, because the market values Aviat below its book value and at 0.62x sales while its backlog is up 14% and management guides adjusted EBITDA up 36% to 50% next year, with only $24.2M of net debt.
The thesis
The market prices Aviat as a low-margin radio maker that barely made a GAAP profit. The fiscal 2026 numbers explain the mood: net income was $2.5M on $439.7M of revenue, and the March and June quarters were both GAAP losses. The order book and the guidance point the other way. Our readers picked it in this week's poll.
The evidence
It trades below book. Shareholders' equity was $267.4M at 3 Jul 2026 (Q4 release, 27 Aug 2026). At the 14 Oct close of $19.44, the 12.86M shares outstanding at the proxy record date are worth $250.0M, or 0.93x book. Enterprise value of about $274.2M is 0.62x fiscal 2026 revenue.
Orders are ahead of sales. Backlog was $367M at year end, up from $323M a year earlier (10-K), and the company says twelve-month book-to-bill stayed above 1. Q4 revenue of $120.9M was the highest of the last eight quarters, and North America revenue in the quarter rose 17.8% to $68.3M. Note that Q4 had 14 weeks.
Profit is guided up. Management guides fiscal 2027 revenue to $455M to $470M and adjusted EBITDA to $50M to $55M, against $36.7M in fiscal 2026.
The balance sheet is not the problem. Debt was $97.0M and cash $72.8M at year end, so net debt was $24.2M, 0.66x adjusted EBITDA. The term loan matures in October 2029. The company bought back $2.2M of stock in Q4 at an average $16.55.
What the market is missing
The GAAP losses came from margin, not demand. Gross margin fell to 29.3% in the March quarter and 30.8% in the June quarter, from 34.9% and 34.2% a year earlier, while backlog kept growing. On 30 Sep Aviat also licensed its microwave radio know-how to Dixon Electro Appliances in India, which already has a manufacturing and supply agreement with Aviat's Indian subsidiary (8-K, 5 Oct 2026).
The risks
Margin may not come back. NEC, which owns 5.7%, has an arbitration claim that started with a $19M demand for extra component purchases; Aviat calls it unfounded and has not accrued a loss (10-Q, 4 May 2026). Insiders own only 5.7% and have not bought shares in the open market in the last year. Adjusted EBITDA is a company measure, not GAAP.
What would change our mind
A Q1 fiscal 2027 report (last year's came on 4 Nov) with gross margin still near 30% and no progress toward the $50M EBITDA floor, or an arbitration award against Aviat well above what its cash can absorb.
Sources: Aviat 10-K FY2026 and Q4 FY2026 release (27 Aug 2026); Q3 FY2026 release and 10-Q (4 May 2026); proxy (2 Oct 2026); 8-K (5 Oct 2026); close from Yahoo Finance, 14 Oct 2026.
By the numbers
| Quarter | Revenue | Gross margin | Net income | Cash | Debt | Diluted shares | Filing |
|---|---|---|---|---|---|---|---|
| Q3 26*3 July 2026 | $120.9M | 30.8% | -$1.3M | $72.8M | $97.0M | n/a | 10-K, 27 August 2026 |
| Q1 2627 March 2026 | $100.0M | 29.3% | -$2.1M | $78.1M | $104.3M | 12.9M | 10-Q, 4 May 2026 |
| Q4 2526 December 2025 | $111.5M | 32.4% | $5.7M | $86.5M | $105.4M | 13.0M | 10-Q, 3 February 2026 |
| Q3 2526 September 2025 | $107.3M | 33.2% | $162K | $64.8M | $106.5M | 13.0M | 10-Q, 4 November 2025 |
| Q2 25*27 June 2025 | $115.3M | 34.2% | $5.2M | $59.7M | $87.6M | n/a | 10-K, 27 August 2026 |
| Q1 2528 March 2025 | $112.6M | 34.9% | $3.5M | $49.4M | $73.9M | 12.8M | 10-Q, 4 May 2026 |
| Q4 2427 December 2024 | $118.2M | 34.6% | $4.5M | $52.6M | $74.9M | 12.8M | 10-Q, 3 February 2026 |
| Q3 2427 September 2024 | $88.4M | 22.4% | -$11.9M | $51.0M | $83.4M | 12.6M | 10-Q, 4 November 2025 |
Source: the company's 10-Q and 10-K filings on SEC EDGAR, as tagged in their XBRL data. Each quarter uses the most recent filing that reports it, so restated quarters compare cleanly. Quarters are labelled by the calendar quarter they end in. Debt is current plus long-term debt; net income is as reported, including any discontinued operations. *Fourth quarter: the full year in the 10-K less the first nine months. n/a: not reported for that quarter on its own.
Insiders
Directors, nominees and executive officers as a group (11 persons) own 5.7% of the shares (Peter A. Smith, CEO, 3.3% on his own), according to the DEF 14A filed 2 October 2026, as of 14 September 2026.
What to watch
- Early November 2026
Q1 fiscal 2027 results, the first quarter against guidance of $455M to $470M revenue and $50M to $55M adjusted EBITDA. The date is not announced; last year's Q1 results came on 4 Nov 2025. Q1 FY2026 release (4 Nov 2025); Q4 FY2026 release (27 Aug 2026)
- 11 Nov 2026
Annual meeting, online: director elections, auditor ratification, say on pay and an amendment to the Tax Benefit Preservation Plan. DEF 14A (2 Oct 2026)
Sources: 10-K FY2026 (27 Aug 2026), Q4 FY2026 release (27 Aug 2026), proxy (2 Oct 2026), close 14 Oct 2026.
Market value: shares outstanding on the latest SEC filing cover page, times the latest price.