Innovative Solutions and Support Inc. Common Stock (ISSC)

FairStock Score: 80/100 — HIGH CONVICTION

Key Financials

Strengths

• Generates $8 million in annual free cash flow (2.1% yield on market cap)
• High return on equity of 32.5% demonstrating efficient capital deployment
• Conservative balance sheet with debt-to-equity of just 0.34, providing financial flexibility
• Altman Z-Score of 6.4 confirms minimal bankruptcy risk and strong solvency
• Revenue growth of 36.6% demonstrates strong top-line momentum

Concerns

• Trades significantly above Graham Number ($10) with negative 108% margin of safety—limited downside protection

AI Analysis

Innovative Solutions and Support Inc. Common Stock is a micro-cap industrials company valued at $355 million. The business generates $90 million in annual revenue with a 4.5% net margin and $8 million in free cash flow. From a quality standpoint, Innovative shows Altman Z-Score of 6.4 confirms fortress-level solvency and strong 33% ROE. On valuation, the stock is reasonably priced at 18.9x earnings, with trades far above its Graham Number ($10) with no margin of safety. Growth dynamics show revenue growing at 36.6% and profit growth of 451.4%. Our composite FairStock Score of 80/100 reflects strong fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Innovative's 37% revenue growth trajectory could accelerate as it captures additional market share in the industrials sector. With $8 million in annual free cash flow (2.1% 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