LSI Industries Inc. Common Stock (LYTS)

FairStock Score: 49/100 — MIXED

Key Financials

Strengths

• Generates $27 million in annual free cash flow (3.3% yield on market cap)
• Solid return on equity of 11.0% above cost of capital
• Conservative balance sheet with debt-to-equity of just 0.24, providing financial flexibility
• Altman Z-Score of 4.3 confirms minimal bankruptcy risk and strong solvency

Concerns

• Trades significantly above Graham Number ($12) with negative 84% margin of safety—limited downside protection
• Revenue declining at 0.5% year-over-year signals potential demand weakness or market share loss

AI Analysis

LSI Industries Inc. Common Stock is a micro-cap technology company valued at $818 million. The business generates $592 million in annual revenue with a 0.4% net margin and $27 million in free cash flow. From a quality standpoint, LSI shows healthy Altman Z-Score of 4.3 and adequate 11% ROE. On valuation, the stock is trading at a premium 27.6x earnings, with trades above its Graham Number with a negative 84% margin. Growth dynamics show revenue growing at -0.5% and profit growth of 12.4%. Our composite FairStock Score of 49/100 reflects mixed 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 $27 million in annual free cash flow (3.3% 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 technology 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