Shares of Frequency Electronics, Inc. FEIM have gained 33.6% since the company reported results for the quarter ended July 31, 2026, compared with the 0.1% growth in the S&P 500 over the same period. Over the past month, FEIM shares have advanced 7.8%, while the S&P 500 has declined 1.4%, reflecting substantial outperformance by the stock over both periods.
FEI posted first-quarter fiscal 2027 earnings per share of 41 cents, which rose from 7 cents in the prior-year quarter.
Revenues of $23.5 million denoted a 70% surge from $13.8 million a year earlier.
Net income increased to $4.2 million from $0.6 million. Operating income climbed to $5.2 million from $0.4 million in the prior-year quarter. Gross margin expanded to approximately 46% compared with about 37% a year earlier.
Frequency Electronics, Inc. Price, Consensus and EPS Surprise
Frequency Electronics, Inc. price-consensus-eps-surprise-chart | Frequency Electronics, Inc. Quote
Other Key Business Metrics
Funded backlog reached a record $129 million at July 31, 2026, up 82% year over year and 16% sequentially from $111 million at April 30, 2026. Management also reported a quarterly book-to-bill ratio of 1.76:1, pointing to continued order momentum.
Cash and cash equivalents stood at $61.4 million at quarter-end versus $1.6 million at April 30, 2026, and management said the company remained debt-free.
Total assets expanded to $153.6 million from $90.7 million.
Stockholders’ equity more than doubled to $119.8 million from the fiscal 2026-end level of $56.4 million.
Net cash provided by operating activities was approximately $3 million in the quarter compared with cash usage of $1.2 million a year earlier.
Management Commentary
President and CEO Thomas McClelland said that the quarter provided a strong proof point for the company’s expected return to growth in fiscal 2027. He highlighted rising opportunities across core space and defense markets, including proliferated satellites, GPS-related programs, missile-defense applications and secure communications. Management also discussed emerging opportunities in quantum sensing and advanced atomic-clock technologies. On the production side, one secure communications customer requested an increase of more than 50% in monthly output, underscoring the capacity demands associated with the expanding order book.
Factors Influencing Headline Numbers
Revenue growth was broad-based. Revenues from commercial and U.S. government communication satellite programs increased by $5.2 million, or more than 80%, while revenues from non-space U.S. Department of Defense customers rose by $4.2 million, or more than 61%.
The roughly nine-percentage-point improvement in gross margin rate reflected higher production levels that drove labor and overhead efficiencies, product mix and efficiencies as programs matured. SG&A expenses increased at a much slower pace than revenues, providing additional operating leverage. R&D spending also increased as FEI continued investing in products and technologies for future growth.
Outlook
FEI reiterated its target of $150 million or more in annual revenues by fiscal 2029, which ends April 30, 2029. McClelland said the first-quarter performance increased management’s confidence in meeting or exceeding that goal.
The company also reiterated its longer-term minimum targets of a 50% gross margin and a 30% operating margin by fiscal 2029. Management expects FEI to be cash-generative on an annual basis going forward, while noting that revenue, backlog and profitability are unlikely to progress evenly from quarter to quarter.
Other Developments
During the quarter, FEI completed a secondary common-stock offering that raised approximately $73 million, with about $14 million of the proceeds received after quarter-end. Management said the additional capital provides flexibility to expand capacity and accommodate larger customer requests. Management also indicated that acquisitions are not necessary to support the current growth plan and that any potential transactions would likely be small tuck-in deals aimed at adding vertical manufacturing capabilities.
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This article originally published on Zacks Investment Research (zacks.com).
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