Richardson Electronics, Ltd. (RELL) stock analysis

P/E above its 5-year median

Richardson Electronics's P/E of 30.5 is above its own 5-year median of 14.5.

P/E above the industry

Richardson Electronics's P/E of 30.5 is above the Wholesale Trade-durable Goods median of 20.3.

EV/EBITDA above its 5-year median

Richardson Electronics's EV/EBITDA of 18.3 is above its 5-year median of 15.2.

P/B below the industry

Richardson Electronics's price-to-book of 1.77 is below the Wholesale Trade-durable Goods median of 2.15.

Trading above fair value

The share price of $20.12 is above our fair value estimate of $14.13.

Margin of safety under 20%

The price is 42.4% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew -4.5% a year over the last three fiscal years, short of the 10% we look for.

EPS growth over 3 years

Needs positive EPS three years ago and today.

Earnings growth accelerating

Net income grew 4748% over the last twelve months, against a 5-year average of 31.0% a year.

Growing faster than the industry

Revenue grew 13.9% over the last twelve months; the Wholesale Trade-durable Goods median is 13.5%.

Company guidance

No outlook found in earnings releases from the last twelve months.

Gross margin improving

Gross margin was 32.2% over the last twelve months, against 31.1% a year earlier.

Return on equity under 15%

Return on equity was 5.2% over the last twelve months and averaged 6.5% over five years; we look for 15% on both.

Return on capital under 10%

Return on invested capital was 6.9%, below the 10% that usually covers the cost of capital.

Return on equity below the industry

Richardson Electronics's return on equity of 5.2% is below the Wholesale Trade-durable Goods median of 11.1%.

Earnings grew over 5 years

Net income grew 31.0% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 3.6% over the last twelve months, against a 5-year average of 3.8%.

Net margin above the industry

Richardson Electronics's net margin of 3.6% is above the Wholesale Trade-durable Goods median of 2.7%.

No debt

Richardson Electronics has no borrowings on its latest balance sheet.

Debt not rising

With no debt today, leverage cannot have risen.

Debt covered by cash flow

There is no debt to cover.

Interest well covered

No meaningful interest expense to cover.

Short-term assets cover short-term debts

Current assets are 4.65 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 6.89; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Richardson Electronics paid dividends worth 1.2% of the share price over the last twelve months.

Yield below Treasuries

The 1.2% 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; Richardson Electronics yields 1.2%.

Dividend stability

Fewer than five years of dividend history.

Covered by earnings

Dividends take 40.6% of net income.

Not covered by free cash flow

Dividends take 1625% of free cash flow.