Frequency Electronics Inc. Common Stock (FEIM)

FairStock Score: 18/100 — RISKY

Key Financials

Strengths

• Solid return on equity of 12.8% above cost of capital
• Conservative balance sheet with debt-to-equity of just 0.13, providing financial flexibility
• Altman Z-Score of 9.7 confirms minimal bankruptcy risk and strong solvency

Concerns

• Trades significantly above Graham Number ($10) with negative 415% margin of safety—limited downside protection
• Revenue declining at 10.8% year-over-year signals potential demand weakness or market share loss
• No meaningful dividend despite modest growth—total return depends entirely on multiple expansion

AI Analysis

Frequency Electronics Inc. Common Stock is a micro-cap technology company valued at $509 million. Revenue stands at $68 million. From a quality standpoint, Frequency shows Altman Z-Score of 9.7 confirms fortress-level solvency and adequate 13% ROE. On valuation, the stock is commanding a steep 71.8x multiple, with trades far above its Graham Number ($10) with no margin of safety. Growth dynamics show revenue growing at -10.8% and profit growth of -89.8%. Our composite FairStock Score of 18/100 reflects below-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. Operational leverage in the business model means incremental revenue growth could disproportionately boost bottom-line profitability.

Bear Case

At 72x 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