Want to see NSYS full AI Analyst Report?
Nortech Systems (NSYS) AI Stock Analysis
Nortech Systems
(NASDAQ:NSYS)
NSYS scores 45, reflecting a company in early recovery with meaningful operational improvements offset by significant financial and technical headwinds. The strongest factor is the latest earnings call, which showed 9.3% revenue growth, record gross margins, a robust and growing backlog (+25.8% YoY on 90-day), and a YTD operating turnaround — suggesting improving fundamentals ahead. However, this is counterbalanced by weak historical financials marked by inconsistent profitability, volatile cash flows, and thin margins that leave little room for error. Technical indicators are firmly bearish with the stock trading below all key short- and medium-term moving averages and momentum indicators signaling continued weakness. Valuation at 32.9x P/E is stretched for a company with sub-1% net margins and no dividend. While the backlog growth and margin expansion trajectory are encouraging leading indicators, the stock needs to demonstrate sustained profitability improvement and technical stabilization before warranting a higher score.
Nortech Systems (NSYS) vs. SPDR S&P 500 ETF (SPY)
- Market Cap
- $29.68M
- Dividend Yield
- ―
- Average Volume (3M)
- 12.23K
- Price to Earnings (P/E)
- 28.3
- Beta (1Y)
- 0.36
- Revenue Growth
- 6.00%
- EPS Growth
- ―
- Country
- US
- Employees
- 699
- Sector
- Healthcare
- Sector Strength
- 51
- Industry
- Medical - Devices
Nortech Systems Business Overview & Revenue Model
Company Description
Nortech Systems Incorporated, founded in 1990 and headquartered in Maple Grove, Minnesota, specializes in delivering comprehensive design and manufacturing solutions. The company provides end-to-end services for various intricate systems, including e...
How the Company Makes Money
Nortech Systems makes money primarily by manufacturing electronics and electromechanical products on behalf of original equipment manufacturers (OEMs) under contract. Its core revenue streams are (1) build-to-print manufacturing—producing PCB assembl...
Nortech Systems Earnings Call Summary
The call presented a largely constructive operational and financial picture: revenue grew 9.3% YoY, gross margin improved by 120 basis points, backlog increased significantly (90-day backlog +25.8% YoY; total backlog +19.8% YoY), and the company achieved a year-to-date operating turnaround from a loss to positive operating income. Offsetting these positives are meaningful near-term costs and risks — notably materially higher incentive and stock-based compensation that increased operating expenses, short-term declines in aerospace and industrial sales, working capital pressure (low cash balance and inventory build to support backlog), and uncertainty around tariff recoveries and supply chain constraints. Overall the improvements in revenue, margin, backlog and YTD profitability outweigh the listed challenges, suggesting constructive momentum with manageable near-term headwinds.
Q2-2026 Updates
Positive Updates
Negative Updates
Company Guidance
Management did not give formal forward-looking numeric guidance but emphasized converting a stronger backlog, reducing inventory and working capital to generate cash, and driving further margin expansion and operating leverage; they cited Q2 net sales of $33.5M (+9.3% YoY), gross profit $5.7M and gross margin of 17% (up 120 bps), Q2 operating income $623k (YTD operating income $670k vs. prior-year operating loss $871k), and Q2 net income $316k ($0.11 diluted) with YTD net income $282k ($0.09) vs. a $1.0M loss ($0.36) a year earlier. Backlog remained a key leading indicator: 90‑day shipment backlog was $33.4M (+6.3% sequential, +25.8% YoY) and total order backlog was $93.8M (+3.4% sequential, +19.8% YoY). Market trends cited included medical device sales +36% YoY, medical imaging +12.2%, industrial -4.7%, and aerospace & defense -12.8% in Q2 (but +8.7% YTD); incentive compensation expense was $402k (Q2) and $647k (YTD), $533k and $647k higher than 2025 comparatives. Liquidity and working capital metrics: cash and restricted cash $1.7M, revolving credit balance $7.6M with $3.6M unused availability, cash used in operating activities $2.4M YTD (vs. $2.8M prior), cash used by AR/contract assets $4.5M, cash used by inventory $3.5M and cash provided by AP changes $2.1M; management also noted record first-half gross margin and ample capacity across 4 Minnesota sites plus Monterrey and Suzhou to grow without significant CapEx.
Nortech Systems Financial Statement Overview
Summary
Nortech Systems' financials reflect a company in early-stage recovery after a difficult 2024. Revenue declined from ~$139M to ~$118M before showing TTM stabilization at ~$125M. Profitability has been highly inconsistent with net losses in two of the last three annual periods and razor-thin TTM net margins of 0.8%. Gross margins in the mid-teens are modest for the industry. The balance sheet benefits from meaningful deleveraging (debt reduced from $20M+ to $10M), but ROE remains very low at 3%. Cash flow has been erratic with multiple years of negative operating and free cash flow, though the TTM period shows modest positive free cash flow of $1.9M. The income statement score of 35, balance sheet score of 52, and cash flow score of 40 collectively paint a picture of a fragile financial foundation with early signs of stabilization.
Income Statement
35NegativeBalance Sheet
52NeutralCash Flow
40Negative| Breakdown | TTM | Dec 2025 | Mar 2025 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 124.65M | 118.36M | 128.13M | 139.33M | 134.12M | 115.17M |
| Gross Profit | 20.50M | 18.01M | 16.72M | 23.10M | 20.48M | 15.86M |
| EBITDA | 3.74M | 2.26M | 1.54M | 8.00M | 5.81M | 10.39M |
| Net Income | 1.03M | -252.00K | -1.29M | 6.87M | 2.01M | 7.15M |
Balance Sheet | ||||||
| Total Assets | 80.05M | 71.92M | 72.44M | 75.13M | 69.54M | 67.09M |
| Cash, Cash Equivalents and Short-Term Investments | 1.38M | 1.66M | 916.00K | 960.00K | 1.03M | 643.00K |
| Total Debt | 17.89M | 15.71M | 18.04M | 14.18M | 16.51M | 20.21M |
| Total Liabilities | 44.57M | 37.37M | 38.43M | 39.78M | 41.46M | 40.98M |
| Stockholders Equity | 35.47M | 34.55M | 34.01M | 35.34M | 28.08M | 26.11M |
Cash Flow | ||||||
| Free Cash Flow | 1.93M | 2.08M | -3.52M | 485.00K | 2.96M | -5.83M |
| Operating Cash Flow | 3.07M | 2.74M | -2.25M | 1.77M | 5.40M | -4.54M |
| Investing Cash Flow | -122.00K | -157.00K | -1.26M | -1.28M | -2.43M | -730.00K |
| Financing Cash Flow | -1.95M | -1.87M | 2.77M | -1.28M | -2.67M | 3.93M |
Nortech Systems Technical Analysis
Price Trends
Market Momentum
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NSYS, the sentiment is Negative. The current price of 10.40 is below the 20-day moving average (MA) of 10.71, below the 50-day MA of 11.20, and below the 200-day MA of 12.29, indicating a bearish trend. The MACD of -0.21 indicates Negative momentum. The RSI at 43.33 is Neutral, neither overbought nor oversold. The STOCH value of 52.17 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for NSYS.
Nortech Systems Risk Analysis
Nortech Systems disclosed 33 risk factors in its most recent earnings report. Nortech Systems reported the most risks in the "Finance & Corporate" category.
Latest Risks Added
0 New RisksNortech Systems Peers Comparison
Overall Rating
LGL67Neutral
CPSH48Neutral
MEI48Neutral
DAIO45Neutral- NSYS45Neutral
LINK41Neutral
Financial Indicators
| Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
| LGL | 67Neutral | $85.14M | -337.50 | -0.53% | ― | 26.35% | -130.90% |
| Sector * | 51Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% |
| CPSH | 48Neutral | $69.60M | 780.43 | 0.15% | ― | 25.56% | ― |
| MEI | 48Neutral | $524.70M | -14.17 | -5.46% | 1.36% | 1.36% | 32.69% |
| DAIO | 45Neutral | $24.53M | -2.54 | -68.36% | ― | -21.81% | -225.39% |
| NSYS | 45Neutral | $29.68M | 28.28 | 2.99% | ― | 6.00% | ― |
| LINK | 41Neutral | $59.71M | -48.59 | -10.92% | ― | 7.85% | 45.80% |
* Healthcare Sector Average
Performance Comparison
| Show on chart | Ticker | Company Name | Price | Change | % Change |
|---|---|---|---|---|---|
| NSYS | Nortech | 10.40 | 1.03 | 10.99% | |
| DAIO | Data I/o | 2.36 | -0.65 | -21.59% | |
| LGL | LGL Group | 6.75 | 0.54 | 8.70% | |
| MEI | Methode Electronics | 14.72 | 8.09 | 121.99% | |
| CPSH | CPS Technologies Corp. | 3.59 | 0.10 | 2.87% | |
| LINK | Interlink Electronics, Inc. | 3.79 | -2.37 | -38.47% |
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.
Date of analysis: Aug 17, 2026