Transcat (TRNS) AI Stock Analysis

• Market Cap: $878.44M
• Dividend Yield: N/A
• Average Volume (3M): 127.90K
• Price to Earnings (P/E): 57.7
• Beta (1Y): 0.83
• Revenue Growth: 8.60%
• EPS Growth: 42.67%
• Country: US
• Employees: 1,104
• Sector: Industrials
• Sector Strength: 90
• Industry: Industrial - Distribution
• EPS (TTM): 0.64
• Shares Outstanding: 9,309,470
• 10 Day Avg. Volume: 165,365
• 30 Day Avg. Volume: 127,902
• PEG Ratio: -6.30
• Price to Book (P/B): 2.44
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 35.72
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $102.00
• Price Target Upside: 11.32% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3

• Rating: 68 Neutral
• Price Target: ―

Transcat shows strong financial performance with robust revenue growth and efficient cash flow management. However, technical analysis signals mixed short-term trends, and valuation suggests high market expectations, possibly limiting immediate upside. The recent earnings call presented both strategic progress and operational challenges, contributing to a balanced outlook.

Positive Factors

Gross Margin Improvement

Gross margin increased to 33.6%, up from 29.5%, indicating improved profitability.

Revenue Growth

The company's acquisition of Martin Calibration Inc. is expected to contribute significantly to annual revenue, with potential for additional gains from cross-selling services.

Valuation Upside

TRNS shares are valued at $106, representing approximately 20.0% upside from recent trading levels, with a premium multiple seen as warranted.

Negative Factors

Operating Results

Shares of Transcat, Inc. traded lower, down 12.7% following the second consecutive quarter of softer than expected operating results.

Organic Growth Challenges

Lower-than-modeled organic growth and Nexa headwinds are likely to pressure TRNS shares.

Share Volatility

Risks include dilution, customer concentration, acquisition integration, increased competition, and share volatility.

Transcat Business Overview & Revenue Model

Company Description

Transcat, Inc. provides calibration and laboratory instrument services in the United States, Canada, and internationally. It operates through two segments, Service and Distribution. The Service segment offers calibration, repair, inspection, analytical qualification, preventative maintenance, consulting, and other related services. This segment also provides CalTrak, a proprietary document and asset management software that is used to integrate and manage the workflow of its calibration service centers and customers' assets; and Compliance, Control and Cost, an online customer portal that provides its customers with web-based asset management capability, as well as a safe and secure off-site archive of calibration and other service records. The Distribution segment sells and rents test, measurement, and control instruments for customers' test and measurement instrumentation needs, as well as value added services, such as calibration/certification of equipment purchase, equipment rental, used equipment for sale, and equipment kitting. This segment markets and sells its products through website, digital and print advertising, proactive outbound sales, and an inbound call center. The company provides services and products to highly regulated industries, principally life science, which includes companies in the pharmaceutical, biotechnology, medical device, and other FDA-regulated industries; and additional industries, including aerospace and defense industrial manufacturing, energy and utilities, and other industries that require accuracy in processes and confirmation of the capabilities of their equipment. Transcat, Inc. was incorporated in 1964 and is headquartered in Rochester, New York.

How the Company Makes Money

Transcat generates revenue through two main segments: Service and Distribution. The Service segment, which is the larger of the two, provides calibration, repair, inspection, and laboratory instrument services. This segment focuses on helping clients maintain compliance with regulatory standards and ensuring operational efficiency. The Distribution segment sells and rents a wide range of test, measurement, and control instrumentation from leading manufacturers. Transcat's strategic partnerships with manufacturers and its extensive catalog of products enhance its ability to meet a diverse range of customer needs across various industries. Additionally, the company's recurring service contracts and growing customer base contribute significantly to its revenue stability and growth.

Transcat Financial Statement Overview

Summary

Transcat exhibits commendable financial health with strong revenue growth, efficient operations, and robust cash flow management. The company demonstrates operational efficiency and profitability, supported by a solid balance sheet with manageable debt levels. Continued focus on revenue growth and liability management augurs well for future stability.

Income Statement

Transcat shows strong revenue growth with a consistent increase over the years. The TTM (Trailing-Twelve-Months) revenue increased by 4.92% compared to the previous year. Gross profit margin and net profit margin are healthy at 32.16% and 6.22%, respectively. The EBIT margin of 7.40% and EBITDA margin of 8.31% also indicate efficient operational management. There is a positive trend in net income, showcasing profitability improvements.

Balance Sheet

The company maintains a relatively stable balance sheet with an improving equity position. The debt-to-equity ratio has decreased over the years, reaching 0.22 in the TTM period, indicating lower leverage. The return on equity (ROE) is solid at 6.03%, showing effective use of shareholders' funds. The equity ratio stands at 72.83%, reflecting a strong reliance on equity financing. However, the increase in total liabilities needs monitoring.

Cash Flow

Transcat displays robust cash flow management with a significant positive operating cash flow to net income ratio of 2.01, indicating efficient cash generation from operations. The free cash flow has grown, contributing to a healthy cash flow position. The free cash flow to net income ratio of 1.15 further supports the company's strong cash flow capabilities. The company has effectively managed its capital expenditures.

Breakdown
TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Income Statement		Total Revenue
272.20M	259.48M	230.57M	204.96M	173.34M	173.10M
	Gross Profit
87.57M	83.81M	68.36M	58.44M	46.12M	42.48M
	EBIT
20.97M	19.78M	16.25M	14.14M	11.07M	10.85M
	EBITDA
35.55M	33.82M	27.39M	24.61M	18.65M	17.51M
	Net Income Common Stockholders
16.94M	13.65M	10.69M	11.38M	7.79M	8.07M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
123.00K	35.18M	1.53M	1.40M	560.00K	499.00K
	Total Assets
35.71M	287.55M	195.75M	177.76M	132.12M	128.12M
	Total Debt
2.53M	21.54M	62.08M	57.65M	27.52M	37.18M
	Net Debt
2.41M	1.89M	60.55M	56.25M	26.96M	36.68M
	Total Liabilities
15.46M	62.38M	96.12M	91.59M	57.04M	61.03M
	Stockholders Equity
20.26M	225.17M	99.63M	86.18M	75.08M	67.09M
Cash Flow		Free Cash Flow
19.40M	19.34M	7.54M	7.47M	17.02M	5.00M
	Operating Cash Flow
34.08M	32.62M	16.95M	17.62M	23.64M	11.56M
	Investing Cash Flow
-99.61M	-41.67M	-18.51M	-39.85M	-10.15M	-20.24M
	Financing Cash Flow
34.63M	27.40M	876.00K	23.69M	-12.65M	8.25M

Transcat Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 91.63
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TRNS, the sentiment is Positive. The current price of 91.63 is above the 20-day moving average (MA) of 82.09, above the 50-day MA of 78.70, and below the 200-day MA of 99.48, indicating a neutral trend. The MACD of 2.47 indicates Negative momentum. The RSI at 65.53 is Neutral, neither overbought nor oversold. The STOCH value of 74.31 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TRNS.

Transcat Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DXPE	77 Outperform	$1.31B	17.39	19.45%	―	11.94%	34.08%
GIC	74 Outperform	$1.04B	17.06	22.15%	3.73%	-0.79%	-13.64%
TRNS	68 Neutral	$878.44M	57.72	5.67%	―	8.60%	42.67%
DSGR	65 Neutral	$1.25B	1,677.02	0.18%	―	13.91%	―
Sector *	64 Neutral	$4.39B	11.81	5.17%	249.38%	3.98%	-12.17%
EVI	63 Neutral	$240.76M	38.15	4.71%	―	3.51%	33.35%
TITN	52 Neutral	$476.26M	11.08	-9.38%	―	-5.32%	―

Transcat Corporate Events

Transcat Corporate Controller Announces Retirement Plans

On April 1, 2025, Scott D. Deverell announced his intention to retire from his roles as Corporate Controller and Principal Accounting Officer at Transcat, Inc. He plans to stay with the company until at least October 1, 2025, to ensure a smooth transition.

Spark’s Take on TRNS Stock

According to Spark, TipRanks’ AI Analyst, TRNS is a Neutral.

The overall stock score is influenced by strong financial performance and strategic acquisitions, offset by bearish technical indicators and high valuation metrics. The company’s ability to maintain revenue growth and manage liabilities remains a strength, but current market conditions and valuation suggest cautious optimism.

To see Spark’s full report on TRNS stock, click here.