Espey Mfg. & Electronics Corp. Common Stock (ESP)

FairStock Score: 65/100 — STEADY

Key Financials

Strengths

• Generates $2 million in annual free cash flow (1.0% yield on market cap)
• High return on equity of 21.0% demonstrating efficient capital deployment
• Altman Z-Score of 5.4 confirms minimal bankruptcy risk and strong solvency

Concerns

• Trades significantly above Graham Number ($39) with negative 80% margin of safety—limited downside protection
• Revenue declining at 10.8% year-over-year signals potential demand weakness or market share loss

AI Analysis

Espey Mfg. & Electronics Corp. Common Stock is a micro-cap industrials company valued at $210 million. The business generates $42 million in annual revenue with a 6.6% net margin and $2 million in free cash flow. From a quality standpoint, Espey shows Altman Z-Score of 5.4 confirms fortress-level solvency and strong 21% ROE. On valuation, the stock is reasonably priced at 17.6x earnings, with trades above its Graham Number with a negative 80% margin. Growth dynamics show revenue growing at -10.8% and profit growth of 47.0%. The 1.4% dividend yield adds an income component for patient holders. Our composite FairStock Score of 65/100 reflects above-average fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Improving fundamentals and sector tailwinds could drive meaningful earnings growth, compressing the effective multiple for patient investors. With $2 million in annual free cash flow (1.0% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

Macro headwinds or sector-specific disruption could pressure margins, particularly if competitive intensity increases in the industrials space. 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