Back in October, I believed that shares of OSI Systems ( OSIS ) were displaying too much momentum to offer security. With shares having risen towards the $250 mark, shares were trading at 23-24 times earnings, all while double-digitThe Value Investor has a Master of Science with specialization in financial markets and a decade of experience tracking companies via catalytic company events. As the leader of the investing group Value In Corporate Events they provide members with opportunities to capitalize on ...

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Core Insights - OSI Systems reported revenue of $464.06 million for the quarter ended December 2025, marking a year-over-year increase of 10.5% and exceeding the Zacks Consensus Estimate by 2.71% [1] - The earnings per share (EPS) for the same period was $2.58, compared to $2.42 a year ago, with an EPS surprise of 2.38% over the consensus estimate of $2.52 [1] Revenue Performance - Healthcare division revenue was $36.53 million, which is 18.6% lower year-over-year and below the average estimate of $44.79 million [4] - Intersegment eliminations reported a revenue of $-19.73 million, a 25.2% year-over-year increase, but worse than the average estimate of $-16.68 million [4] - Optoelectronics and Manufacturing division revenue was $112.55 million, exceeding the average estimate of $107.46 million with an 11.7% year-over-year increase [4] - Security division revenue reached $334.71 million, surpassing the average estimate of $318.69 million and showing a 15.4% year-over-year increase [4] Operating Income Analysis - Non-GAAP operating income for the Security Division was $59.64 million, slightly above the average estimate of $59.53 million [4] - Non-GAAP operating loss for Corporate/Elimination was $-9.52 million, better than the average estimate of $-10.24 million [4] - Non-GAAP operating income for the Healthcare Division was $0.53 million, below the average estimate of $2.34 million [4] - Non-GAAP operating income for the Optoelectronics and Manufacturing Division was $14.49 million, exceeding the average estimate of $13.88 million [4] Stock Performance - OSI shares have returned +6.4% over the past month, outperforming the Zacks S&P 500 composite's +0.8% change [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [3]

分组1 - OSI Systems reported quarterly earnings of $2.58 per share, exceeding the Zacks Consensus Estimate of $2.52 per share, and showing an increase from $2.42 per share a year ago, resulting in an earnings surprise of +2.38% [1] - The company achieved revenues of $464.06 million for the quarter ended December 2025, surpassing the Zacks Consensus Estimate by 2.71% and increasing from $419.82 million year-over-year [2] - OSI has consistently outperformed consensus EPS and revenue estimates over the last four quarters [2] 分组2 - The stock has gained approximately 6.4% since the beginning of the year, outperforming the S&P 500's gain of 1.9% [3] - The current consensus EPS estimate for the upcoming quarter is $2.81 on revenues of $473.19 million, and for the current fiscal year, it is $10.42 on revenues of $1.84 billion [7] - The Electronics - Miscellaneous Components industry, to which OSI belongs, is currently ranked in the top 15% of over 250 Zacks industries, indicating a favorable outlook for the sector [8]

OSI Systems (NasdaqGS:OSIS) Q2 2026 Earnings call January 29, 2026 04:30 PM ET Company ParticipantsAjay Mehra - EVPAlan Edrick - EVP and CFOSeth Seifman - VP and Equity Research AnsalystConference Call ParticipantsChristopher Glynn - Equity AnalystJeffrey Michael Martin - Managing Director and Senior Research AnalystLawrence Scott Solow - Research AnalystMariana Perez Mora - Research AnalystMichael Joshua Nichols - Senior Research AnalystOperatorThe OSI Systems, Inc. second quarter 2026 conference call. At ...

Financial Performance - The company reported Q2 revenues of $464 million, an increase of 11% year-over-year, setting a Q2 record [4][6] - Non-GAAP adjusted EPS reached a record of $2.58, reflecting strong earnings growth [4] - Operating cash flow was solid at $62 million, with expectations for even stronger cash flow in calendar 2026 [4][18] Business Segment Performance - The security division generated revenues of $335 million, up 15% year-over-year, driven by higher service revenues and RF business integration [13][14] - Optoelectronics and Manufacturing division revenues increased 12% year-over-year to $113 million, achieving a new Q2 record [14] - The Healthcare division faced challenges, with sales remaining soft, but the company is focused on long-term value creation through intensified sales efforts [10][11] Market Dynamics - The security division's bookings were lower than expected due to delays from the U.S. government shutdown and international customer pushouts, but the pipeline remains strong [7][24] - The RF business is expanding with a $30 million international order for naval operations and participation in the Golden Dome missile defense initiative, which has a ceiling value of $151 billion [8][9] - The optoelectronics division is benefiting from OEMs diversifying supply chains away from China, with strong demand across various industries [10] Strategic Direction - The company is committed to innovation, as reflected in increased R&D spending, which rose to $19.8 million, or 4.3% of revenues [15] - The company is raising its fiscal 2026 non-GAAP EPS guidance to a range of $10.30-$10.55, indicating 10%-13% year-over-year growth [20] - The focus remains on operational excellence and long-term value creation for shareholders, with plans to invest in key strategic areas [22] Management Commentary - Management expressed confidence in a strong second half of fiscal 2026, supported by a healthy backlog and anticipated cash inflows from Mexico receivables [6][18] - The company acknowledged the impact of the government shutdown on order timing but remains optimistic about future growth opportunities [32][34] - Management highlighted the importance of service revenue growth, which is expected to outpace product revenue growth, contributing to margin expansion [36][37] Other Important Information - The company completed a convertible notes transaction raising $575 million, enhancing liquidity and financial flexibility [19] - The balance sheet remains solid, with net leverage at approximately 2.2 [19] Q&A Session Question: Orders activity in security was softer than expected - Management acknowledged that orders were lower due to delays but emphasized that these opportunities are still alive in the pipeline [24] Question: Details on the IDIQ contract with Golden Dome - Management indicated that while timing is uncertain, they feel well-positioned for future orders related to this significant contract [25][26] Question: Interest expense outlook - Management expects a decrease in interest expense from Q2 to Q3 due to the paydown of the revolver [27] Question: Cash flow expectations - Management anticipates strong free cash flow over the next 12 months, with potential for additional share buybacks [28] Question: Impact of government shutdown on RFP timing - Management noted that the shutdown has pushed some timelines to the right, but they expect some cash flow in the first half of the year [32] Question: Opportunities in the radio frequency business - Management expressed confidence in growth prospects for the RF business, particularly related to the Golden Dome initiative [56] Question: Pipeline for major events like FIFA World Cup and Olympics - Management highlighted their strong position and experience in handling major events, indicating a robust pipeline for upcoming opportunities [60]

Financial Performance - The company reported Q2 revenues of $464 million, an increase of 11% year-over-year, setting a Q2 record [4][13] - Non-GAAP adjusted EPS reached a record of $2.58, reflecting strong earnings growth [4] - Operating cash flow was solid at $62 million, with expectations for even stronger cash flow in calendar 2026 [4][19] Business Segment Performance - The security division achieved revenues of $335 million, up 15% year-over-year, driven by higher service revenues and RF business growth [13][14] - Optoelectronics and Manufacturing division revenues increased 12% year-over-year to $113 million, marking a new Q2 record [14][10] - The Healthcare division faced challenges, with sales being soft in Q2, but the company is focused on long-term value creation through intensified sales efforts and new product development [11][12] Market Performance - The security division's bookings were lower than expected due to delays from the U.S. government shutdown and international customer pushouts, but the pipeline remains strong [7][26] - The RF business is expanding with new contracts, including a $30 million order for naval operations and participation in the Golden Dome missile defense initiative [9][10] - The optoelectronics division is benefiting from OEMs diversifying supply chains away from China, with strong demand across various industries [11] Company Strategy and Industry Competition - The company is committed to innovation, as reflected in increased R&D spending, which rose to $19.8 million in Q2 [16][17] - The expansion of manufacturing facilities in Texas aims to enhance production capacity and operational efficiency in the RF sector [10] - The company is well-positioned in the security market, with a broad range of offerings and a healthy backlog, providing confidence for future growth [6][10] Management Commentary on Operating Environment and Future Outlook - Management expressed optimism about the second half of fiscal 2026, anticipating strong cash flow and operational excellence [24][23] - The company raised its fiscal 2026 non-GAAP EPS guidance to a range of $10.30-$10.55, reflecting expected growth despite challenges from reduced revenues related to Mexico contracts [21][22] - Management acknowledged the impact of the government shutdown on order timing but remains confident in the pipeline and future opportunities [35][36] Other Important Information - The company completed a convertible notes transaction, raising $575 million, which enhances liquidity and financial flexibility [20] - The balance sheet remains solid, with net leverage at approximately 2.2 [20] Q&A Session Summary Question: Orders activity in security was softer than expected - Management noted that orders were pushed due to the government shutdown, but the pipeline remains strong and they expect a robust next six months [26] Question: Details on the Golden Dome contract - Management indicated that while timing is uncertain, they feel well-positioned for future orders related to the Golden Dome initiative [27][28] Question: Interest expense outlook - Management anticipates a decrease in interest expense from Q2 to Q3 due to the paydown of the revolver [29] Question: Potential for additional share purchases - Management confirmed that stock buybacks remain an option, with a sizable buyback already executed in Q2 [31] Question: Impact of government shutdown on RFP timing - Management stated that while some funds are flowing in, most significant impacts will be felt later in calendar 2026 [34] Question: Mexico DSO and cash flow expectations - Management expects significant free cash flow conversion as Mexico receivables normalize, driving down DSO [36] Question: Service revenue growth potential - Management is optimistic about service revenue growth outpacing product revenue growth, leading to margin expansion [38][39] Question: Revenue guidance for the back half of the year - Management indicated that Q4 is expected to be significantly stronger than Q3 due to the timing of Mexico revenues [42][43] Question: Aviation market pipeline - Management confirmed that the aviation market remains strong, with a healthy pipeline despite some delays [45][46] Question: International demand for security products - Management noted strong international demand, particularly in the Middle East, with various countries increasing focus on security [67] Question: Funding impact on revenue outlook - Management stated that near-term funding issues are not expected to significantly impact revenue or cash outlook [68]

Financial Performance - Total net revenues for the six months ended December 31, 2025, increased to $848.68 million, up from $763.83 million in the same period of 2024, representing an increase of 11.1%[11] - Gross profit for the six months ended December 31, 2025, was $274.81 million, compared to $268.65 million for the same period in 2024, reflecting a growth of 2.4%[11] - Net income for the six months ended December 31, 2025, rose to $59.26 million, compared to $55.76 million in the prior year, marking an increase of 6.7%[11] - The company reported a diluted earnings per share of $3.39 for the six months ended December 31, 2025, up from $3.27 in the same period of 2024, an increase of 3.7%[11] - Basic earnings per share for the six months ended December 31, 2025, was $3.52, up from $3.33 in 2024, reflecting a growth of 5.7%[22] - The company reported a segment income from operations of $97,472 for the six months ended December 31, 2025[100] Cash and Liquidity - Cash and cash equivalents decreased to $106.41 million as of June 30, 2025, down from $336.72 million at December 31, 2024[10] - Net cash provided by operating activities for the six months ended December 31, 2025, was $79.337 million, significantly higher than $15.388 million in 2024[18] - Cash and cash equivalents at the end of the period totaled $336.722 million, with approximately 32% held by foreign subsidiaries[24] - Net cash provided by financing activities was $172.6 million for YTD Q2 fiscal 2026, compared to $89.2 million in the same prior-year period, driven by net proceeds of $562.9 million from the issuance of 2031 Notes[146] - Cash used in investing activities was $21.4 million for YTD Q2 fiscal 2026, a decrease from $97.6 million in the same prior-year period, mainly due to a prior-year business acquisition[145] Expenses and Liabilities - Total current liabilities increased to $696.94 million as of June 30, 2025, compared to $535.36 million at December 31, 2024, indicating a rise of 30.1%[10] - Operating expenses for the six months ended December 31, 2025, were $182.95 million, slightly up from $180.37 million in the same period of 2024, an increase of 1.4%[11] - Total interest and other expense for the six months ended December 31, 2025, was $(18,111) thousand, compared to $(15,978) thousand for the same period in 2024, reflecting a 7.1% increase[31] - The company recognized $5.6 million in impairment, restructuring, and other charges during the six months ended December 31, 2025, including $1.0 million for asset impairment and $1.1 million for employee terminations[55] Research and Development - Research and development expenses for the six months ended December 31, 2025, were $40.19 million, compared to $36.03 million in the same period of 2024, reflecting an increase of 11.9%[11] - Research and development expenses for the three months ended December 31, 2025, totaled $19,759, reflecting the company's commitment to innovation[97] - Research and development expenses rose by $1.5 million to $19.8 million in Q2 fiscal 2026, reflecting increased compensation costs for new product development initiatives[125] Acquisitions and Assets - The company acquired a provider of military and surveillance solutions for approximately $76 million, with total purchase consideration of $85.7 million allocated to assets acquired[38] - The acquisition date fair value of total assets acquired was $113.9 million, including $30.7 million in goodwill and $47.3 million in other intangible assets[38] - Goodwill as of December 31, 2025, was $385,747 thousand, down from $387,393 thousand as of June 30, 2025, reflecting a decrease of 0.4%[42] - Total intangible assets increased from $261,829 thousand as of June 30, 2025, to $268,083 thousand as of December 31, 2025[43] Shareholder Activities - The company repurchased 546,945 shares of common stock for a total price of $146.1 million, with 643,611 shares remaining available for repurchase under the authorized program[80] - Stock-based compensation expense for the six months ended December 31, 2025, was $13.250 million, down from $14.931 million in 2024[75] - As of December 31, 2025, total unrecognized compensation cost related to share-based compensation grants was estimated at $20.4 million[75] Taxation - The effective tax rates for the six months ended December 31, 2024 and 2025 were 22.9% and 19.7%, respectively, with net discrete tax benefits recognized of $1.7 million in 2025[92] - The effective tax rate decreased from 23.3% in Q2 fiscal 2025 to 19.5% in Q2 fiscal 2026, with a provision for income taxes of $9.4 million[128] Market and Economic Factors - The company faces uncertainties related to global economic factors, including inflation, interest rates, and geopolitical tensions, which may impact future performance[113] - The company is evaluating the financial impact of the One Big Beautiful Bill Act, which may affect its effective tax rate and deferred tax balances in future periods[93] Segment Performance - Security division revenues rose by 15.4% year-over-year to $334.7 million, with product revenues increasing by approximately $17.7 million and service revenues by $27.0 million[120] - Security division revenues for the six months ended December 31, 2025, increased by 14.5% to $589.0 million, driven by growth in both product and service revenues[130] - The company reported total revenues of $419.82 million for the three months ended December 31, 2024, with external customer revenue from the Security division at $289.99 million[95]

Financial Performance - Record Q2 revenues of $464 million, representing an 11% year-over-year growth[7] - Non-GAAP diluted earnings per share for Q2 reached a record $2.58, up 7% from the previous year[4] - Operating cash flow for Q2 was $62 million, reflecting strong operational performance[7] - The company raised its fiscal 2026 non-GAAP diluted earnings per share guidance to a range of $10.30 - $10.55, indicating a 10% - 13% year-over-year growth[8] - GAAP revenues for the three months ended December 31, 2024, were $419,820 million, while for the same period in 2025, revenues increased to $464,057 million, a growth of approximately 10.5%[20] - Total revenues for the six months ended December 31, 2024, were $763.827 million, with an operating income of $88.285 million, representing 11.6% of revenues[22] - For the same period in 2025, revenues increased to $848.680 million, with operating income of $91.868 million, accounting for 10.8% of revenues[22] - Non-GAAP net income for the six months ended December 31, 2024, was $62.521 million, with an EPS of $3.67[22] - In 2025, non-GAAP net income rose to $69.930 million, resulting in an EPS of $4.00[22] Segment Performance - The Security division reported a 15% increase in Q2 revenues year-over-year, with a focus on expanding recurring services revenue[5] - The Optoelectronics and Manufacturing division achieved 12% revenue growth in Q2, highlighting operational efficiency and customer demand[5] - The Security segment's GAAP revenues increased from $289,987 million in 2024 to $334,705 million in 2025, a growth of approximately 15.4%[20] - The Optoelectronics & Manufacturing segment's GAAP revenues increased from $100,743 million in 2024 to $112,552 million in 2025, a growth of about 11.5%[20] - The Healthcare segment's GAAP revenues decreased from $44,854 million in 2024 to $36,534 million in 2025, a decline of approximately 18.6%[20] - The Security segment generated revenues of $514.301 million in 2024, with an operating income of $82.909 million, which is 16.1% of revenues[22] - The Optoelectronics & Manufacturing segment reported revenues of $198.538 million in 2024, with an operating income of $22.891 million, representing 11.5% of revenues[22] - The Healthcare segment had revenues of $81.956 million in 2024, with an operating income of $2.522 million, accounting for 3.1% of revenues[22] Financial Position - The company's backlog stood at $1.8 billion as of December 31, 2025[4] - Total assets decreased from $2,522,241 million to $2,241,257 million, a decline of approximately 11.1%[18] - Total current assets decreased from $1,686,845 million to $1,422,861 million, a decline of about 15.6%[18] - Total liabilities increased from $1,676,751 million to $1,290,173 million, a decrease of approximately 23.1%[18] - Total stockholders' equity increased from $845,490 million to $951,084 million, an increase of about 12.5%[18] Operational Efficiency - Operating income as a percentage of revenues decreased from 13.8% in 2024 to 12.7% in 2025[20] - Non-GAAP operating income for the three months ended December 31, 2024, was $62,870 million, while in 2025, it increased to $65,147 million, reflecting a growth of about 3.6%[20] - Non-GAAP operating income for the Security segment was $90.096 million, or 17.5% of revenues, in 2024[22] - Non-GAAP operating income for the Optoelectronics & Manufacturing segment was $24.608 million, representing 12.4% of revenues in 2024[22] Strategic Initiatives - The company is well-positioned to capitalize on increasing industry demand and pursue strategic initiatives across key markets[3] - In November 2025, the company issued $575 million of convertible senior notes due in 2031 at an interest rate of 0.50%[5] - The company maintained its previous revenue guidance while increasing its earnings per share outlook[8] - The company incurred impairment, restructuring, and other charges of $1.393 million in 2024, which was 0.2% of revenues[22]

Investors interested in Electronics - Miscellaneous Components stocks are likely familiar with TDK Corp. (TTDKY) and OSI Systems (OSIS) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight co ...