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Nortech Systems (NSYS) AI Stock Analysis
Nortech Systems
(NASDAQ:NSYS)
The overall score reflects a balance of solid but inconsistent fundamentals, cautious technicals, and constructive recent operating momentum. Financial performance is the dominant factor: a strong, deleveraging balance sheet and positive TTM free cash flow are offset by historically volatile margins and earnings, placing the company in the upper-mid range rather than high quality. Technical indicators point to a stock in a downtrend and trading below key moving averages, which tempers the score despite low-beta characteristics and some signs of emerging oversold conditions. Valuation is relatively demanding given a P/E near the mid-30s and no dividend, especially for a business still proving the durability of its turnaround. The latest earnings call adds a positive overlay, with improving revenue, margins, backlog, and year-to-date profitability suggesting that execution is trending in the right direction, but near-term cost and working capital pressures keep the overall rating in a neutral-to-cautiously positive zone rather than outright bullish.
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
Income statement quality is moderate (score 62) with low single-digit margins, volatile profitability, and revenues that have only recently resumed growth after prior declines. The balance sheet is a relative strength (score 78), with equity meaningfully exceeding debt, steadily growing assets, and a materially improved debt-to-equity ratio, though returns on equity remain inconsistent. Cash flow is weaker (score 55), with positive TTM free cash flow but a sharp recent contraction and a multi-year history of volatile, sometimes lagging cash generation; overall this yields a solid but clearly mixed financial profile.
Income Statement
62PositiveBalance Sheet
78PositiveCash Flow
55Neutral| 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- NSYS61.7Neutral
CPSH48Neutral
MEI48Neutral
DAIO45Neutral
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% |
| NSYS | 62Neutral | $29.68M | 28.28 | 2.99% | ― | 6.00% | ― |
| 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% |
| 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