ESCO Technologies Inc. Common Stock (ESE)

FairStock Score: 46/100 — MIXED

Key Financials

Strengths

• Generates $340 million in annual free cash flow (4.1% yield on market cap)
• Conservative balance sheet with debt-to-equity of just 0.14, providing financial flexibility
• Altman Z-Score of 7.0 confirms minimal bankruptcy risk and strong solvency
• Revenue growth of 35.0% demonstrates strong top-line momentum

Concerns

• Trades significantly above Graham Number ($81) with negative 298% margin of safety—limited downside protection

AI Analysis

ESCO Technologies Inc. Common Stock is a small-cap technology company valued at $8.3 billion. The business generates $1.2 billion in annual revenue with a 2.5% net margin and $340 million in free cash flow. From a quality standpoint, ESCO shows Altman Z-Score of 7.0 confirms fortress-level solvency and modest 9% ROE. On valuation, the stock is commanding a steep 66.2x multiple, with trades far above its Graham Number ($81) with no margin of safety. Growth dynamics show revenue growing at 35.0% and profit growth of 22.2%. Our composite FairStock Score of 46/100 reflects mixed fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

ESCO's 35% revenue growth trajectory could accelerate as it captures additional market share in the technology sector. With $340 million in annual free cash flow (4.1% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

At 66x earnings, any growth disappointment triggers rapid multiple compression—a 20% earnings miss plus multiple contraction to 20x implies 40%+ downside. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer