Knowles (1K3) AI Stock Analysis

Company Guidance

For the fourth quarter of 2026, revenues are expected to be between $180 million and $190 million, up 14% year-over-year at the midpoint, with R&D expenses between $10 million and $12 million, selling and administrative expenses within the range of $29 million to $31 million, adjusted EBIT margin within the range of 23% to 25%, interest expense of $1.5 million, an effective tax rate of 15% to 19%, EPS within the range of $0.39 to $0.43 per share, up $0.05 or 14% year-over-year at the midpoint, weighted average shares outstanding of 87 million, cash from operating activities within the range of $60 million to $70 million, and capital spending of $8 million; full year capital spending is expected to be approximately 5% of revenues, 2026 revenue growth is expected to be 16% at the midpoint of the guidance range and adjusted EBITDA growth 24% over 2025 levels, and capital spending is expected to be above the historic range of 3% to 5%, increasing to 5% to 7% of revenues in 2027. For 2027, hearing health is expected to perform at historical levels, MSA should still probably be in that 2% to 4% for the full year, with a headwind of about 2% to 3% next year, especially more in the first half, PD is expected to have very strong year-over-year growth in the first half but be relatively flat sequentially because of capacity constraints, and MSA gross margins may be a little 1% or so higher in '27 over '26; Micro Solutions revenue is expected to be closer to $3 million this year, with a clear path north of $5 million next year and north of $10 million in '28 and maybe even more, while the company sees a path within 2 to 3 years from just a little north of 25% EBITDA margins this year to 30%.