ESCO Technologies Inc (ESE) stock analysis

P/E below its 5-year median

ESCO Technologies's P/E of 19.8 is below its own 5-year median of 29.5.

P/E below the industry

ESCO Technologies's P/E of 19.8 is below the Communications Equipment median of 24.9.

EV/EBITDA against its history

Needs positive EBITDA and price history.

P/B above the industry

ESCO Technologies's price-to-book of 3.84 is above the Communications Equipment median of 2.54.

Trading below fair value

The share price of $239.40 is below our fair value estimate of $295.28.

Margin of safety under 20%

The price is 18.9% below fair value, less than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew 8.5% a year over the last three fiscal years, short of the 10% we look for.

EPS growing 10%+ a year

Diluted EPS grew 54.0% a year over the last three fiscal years.

Earnings growth accelerating

Net income grew 174% over the last twelve months, against a 5-year average of 24.7% a year.

Growing faster than the industry

Revenue grew 27.0% over the last twelve months; the Communications Equipment median is 10.9%.

Guidance raised

ESCO Technologies raised its FY 2026 Sales outlook on Aug 6, 2026.

Gross margin slipping

Gross margin was 42.0% over the last twelve months, against 42.6% a year earlier.

Return on equity under 15%

Return on equity was 21.4% over the last twelve months and averaged 10.6% over five years; we look for 15% on both.

Return on invested capital

Needs operating income and invested capital.

Return on equity above the industry

ESCO Technologies's return on equity of 21.4% is above the Communications Equipment median of -3.7%.

Earnings grew over 5 years

Net income grew 24.7% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 24.4% over the last twelve months, against a 5-year average of 13.5%.

Net margin above the industry

ESCO Technologies's net margin of 24.4% is above the Communications Equipment median of -2.2%.

Low debt

Debt is 5.3% of shareholders' equity, under the 40% we consider low.

Debt falling against equity

Debt to equity fell from 6.5% five years ago to 5.3%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 287% of total debt.

Interest coverage

Interest expense is not reported separately.

Short-term assets cover short-term debts

Current assets are 1.38 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 6.12; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

ESCO Technologies paid dividends worth 0.1% of the share price over the last twelve months.

Yield below Treasuries

The 0.1% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; ESCO Technologies yields 0.1%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 2.6% of net income.

Covered by free cash flow

Dividends take 4.0% of free cash flow.