Taylor Devices Jumps 74% in 6 Months: Should You Buy the Stock?

Core Insights - Taylor Devices, Inc. (TAYD) has seen a significant share price increase of 74.4% over the past six months, outperforming the industry average growth of 17% and competitors like Nordson Corporation and RBC Bearings [1][2] Company Overview - Taylor Devices is based in New York and specializes in designing, developing, manufacturing, and marketing shock absorption, rate control, and energy storage devices for various sectors, including structural, industrial, aerospace, and defense [3] - The company operates in competitive markets and sources materials from diverse suppliers to minimize dependency on any single source [3] Key Growth Drivers - U.S. sales accounted for 88% of total revenue in the first half of fiscal 2026, up from 82% the previous year, indicating a 15% growth in domestic sales driven by demand in aerospace, defense, and structural engineering [4] - The revenue mix has shifted towards non-long-term, higher-margin projects, resulting in a 34% year-over-year increase in sales and contributing to a 46% gross margin [5][6] - Sales to the aerospace and defense segment increased to 61% of total revenues in the second quarter, up from 59% a year earlier, benefiting from rising global geopolitical tensions and defense budgets [7] Financial Position - The company has a strong balance sheet with nearly $39 million in short-term investments and $2 million in cash, allowing for strategic investments and economic resilience [8] - Interest income from U.S. treasuries and corporate bonds rose 18% year over year, supporting profitability during operational fluctuations [8] Challenges - Taylor Devices faces operational challenges, including a 9% year-over-year decline in revenue from long-term projects and a 32% drop in international sales, indicating a reliance on U.S. markets [9] - Rising research and development expenses (up 72% YoY) have compressed margins, and declining inventory turnover suggests potential inefficiencies [9] Valuation - TAYD is currently trading at 4.35X trailing 12-month EV/sales, above the industry average of 4.13X but lower than peers like Nordson (6.25X) and RBC Bearings (9.52X) [10] Conclusion - Taylor Devices presents a compelling growth story with strong fundamentals and exposure to long-term trends in defense and infrastructure, but monitoring backlog trends and cost structures is essential for sustainable performance [11][12]