BK Technologies Corp. (BKTI) designs and manufactures mission-critical communications equipment primarily for government and public safety applications. 

BK Technologies Corp (BKTI) also has a Software-as-a-Service (SaaS) division that develops public safety smartphone applications. BKRplay, the flagship application, enhances user functionality when paired with BKTI’s radios. It has also launched InteropONE, a push-to-talk-over-cellular (PTTOC) SaaS service enabling cross-network group communication for emergency incident commanders.

 
The BKR 9000 multiband radio is driving growth through federal, state and local agency adoption, leveraging its competitive pricing as a unified platform replacement for legacy and multi-vendor systems.

Most notably, Gross Margin in Q2 expanded sharply to 47.4% from 37.3% in the prior year, driven by a favorable product mix and efficiencies from outsourced manufacturing. This enabled a 77.5% YOY improvement in adj. EBITDA. The prognosis for continued YOY improvement in Gross Margin in the near term appears strong.

Zacks currently has an Outperform rating on BK Technologies Corp. (BKTI).

The stock is currently trading at 3.1X trailing 12-month EV/Sales TTM, which compares to 3.9X for the Zacks sub-industry, 7.5X for the Zacks sector and 5.4X for the S&P 500 index.
Over the past five years, the stock has traded as high as 3.3X and as low as 0.4X, with a five-year median of 0.8X.

The stock is currently trading at 18.2X trailing 12-month EV/EBITDA TTM, which compares to 29.6X for the Zacks sub-industry, 17.8X for the Zacks sector and 17.7X for the S&P 500 index.

Over the past year, the stock has traded as high as 19.1X and as low as 7.6X, with a one-year median of 12.4X.

The other small cap, Bridger Aerospace Group Holdings, Inc. (BAER Quick QuoteBAER - Free Report) , is a provider of aerial firefighting services, specializing in fire suppression, aerial surveillance, and maintenance, repair and overhaul (MRO) of firefighting aircraft.

While it is no doubt difficult to predict future wildfire frequency, it is clear they are occurring more often and with greater intensity. This unpredictability is a constant stressor on a business model predicated heavily on the efficient utilization of significant fixed assets (scooper planes).

 
However, the company has made strides to blunt this variability and associated choppy cash burn via longer-term contracts and a recent $46 m sale-leaseback. Bridger Aerospace Group (BAER Quick QuoteBAER - Free Report) is guiding for FY 2025 sales of $105-$111 m with adj. EBITDA of $42-$48 m. This compares to $98.6 m and $37.3 m in the prior year, respectively.

The last 2 quarters have been record quarters and the company appears to have momentum. Another important consideration to the investment thesis is the company’s extensive debt load of $201.9 m. The sale-leaseback should help reduce debt to some degree, but a potential consistent rate-lowering environment could materially reduce interest expense by enabling refinancing.

Bank of America recently highlighted the impact of interest rates on the small cap asset class. It estimates the cumulative hit to net interest expense over the next five years at 35% of operating earnings, assuming 100 basis points of cuts next year, versus 42% if no cuts occur.

Zacks currently has a Neutral rating on Bridger Aerospace (BAER Quick QuoteBAER - Free Report) .

The stock is currently trading at 5.4X trailing 12-month EV/Sales TTM, which compares to 3.2X for the Zacks sub-industry, 3.3X for the Zacks sector and 5.5X for the S&P 500 Index.
Over the past three years, the stock has traded as high as 33.4X and as low as 5.1X, with a three-year median of 9.9X.