Novanta Inc (NOVT) stock analysis

P/E above its 5-year median

Novanta's P/E of 90.7 is above its own 5-year median of 81.2.

P/E above the industry

Novanta's P/E of 90.7 is above the Electronic and Other Electrical Equipment and Components, except Computer Equipment median of 31.8.

EV/EBITDA below its 5-year median

Novanta's EV/EBITDA of 32.8 is below its 5-year median of 36.7.

P/B above the industry

Novanta's price-to-book of 2.77 is above the Electronic and Other Electrical Equipment and Components, except Computer Equipment median of 1.63.

Trading above fair value

The share price of $118.88 is above our fair value estimate of $94.71.

Margin of safety under 20%

The price is 25.5% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew 4.4% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew -10.6% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew 0.6% over the last twelve months, against a 5-year average of 3.9% a year.

Growing faster than the industry

Revenue grew 13.2% over the last twelve months; the Electronic and Other Electrical Equipment and Components, except Computer Equipment median is 1.6%.

Guidance raised

Novanta raised its full year 2026 GAAP revenue outlook on Aug 5, 2026.

Gross margin slipping

Gross margin was 44.5% over the last twelve months, against 44.8% a year earlier.

Return on equity under 15%

Return on equity was 4.4% over the last twelve months and averaged 9.9% over five years; we look for 15% on both.

Return on capital under 10%

Return on invested capital was 3.7%, below the 10% that usually covers the cost of capital.

Return on equity above the industry

Novanta's return on equity of 4.4% is above the Electronic and Other Electrical Equipment and Components, except Computer Equipment median of -30.6%.

Earnings grew over 5 years

Net income grew 3.9% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 4.9% over the last twelve months, against a 5-year average of 7.2%.

Net margin above the industry

Novanta's net margin of 4.9% is above the Electronic and Other Electrical Equipment and Components, except Computer Equipment median of -64.6%.

High debt

Debt is 51.1% of shareholders' equity, above the 40% we consider low.

Debt rising against equity

Debt to equity rose from 42.0% five years ago to 51.1%.

Debt not well covered by cash flow

Operating cash flow over the last twelve months equals 19.8% of total debt; we look for at least 20%.

Interest coverage

Interest expense is not reported separately.

Short-term assets cover short-term debts

Current assets are 1.18 times current liabilities.

Bankruptcy risk in the grey zone

The Altman Z-score is 2.37; above 3 is the safe zone and below 1.8 the distress zone.

No dividend

Novanta has not paid a dividend in the last twelve months.

Yield against Treasuries

No dividend.

Yield against the market

No dividend.

Dividend stability

No dividend.

Earnings cover

No dividend.

Cash-flow cover

No dividend.