Shares of Espey Mfg. & Electronics Corp. (ESP Quick QuoteESP - Free Report) have gained 1.8% since the company reported its earnings for the quarter ended June 30, 2026. This compares with the S&P 500 index’s 1.2% decline over the same period. Over the past month, the stock has advanced 4.6% versus the S&P 500’s 0.03% increase.

For the fourth quarter of fiscal 2026, Espey reported EPS of $1.15, which increased from $1.05 in the prior-year quarter. 

The company’s net sales of $13.5 million denoted a rise from $9.6 million in the year-ago quarter. 

Net income increased to $3.3 million from $2.9 million.

Espey Mfg. & Electronics Corp. Price, Consensus and EPS Surprise

Espey Mfg. & Electronics Corp. price-consensus-eps-surprise-chart | Espey Mfg. & Electronics Corp. Quote

Espey’s Other Key Business Metrics

Espey ended fiscal 2026 with a sales backlog of $134.9 million, down from $139.7 million at June 30, 2025. Of the latest backlog, $123.7 million was funded and $11.2 million was unfunded. About $88.2 million of the backlog was associated with three significant customers. Management expects approximately $48 million of the June 30, 2026, backlog to be fulfilled during fiscal 2027.

Working capital stood at approximately $54.7 million as of June 30, 2026, compared with $45.7 million a year earlier. Espey did not borrow funds during either of the past two fiscal years and had access to a $3 million line of credit, which management does not expect to use in the foreseeable future.

Fiscal 2026 Update

For fiscal 2026, net sales increased $46.1 million from $44 million in fiscal 2025. Gross profit climbed to $16.3 million from $12.7 million, with gross margin improving to 35.3% from 28.9%. 

Full-year net income rose to $11.2 million from $8.1 million, while EPS increased to $3.89 from $3.02.

Management Commentary

Management said fiscal 2026 sales growth was primarily driven by stronger magnetics programs and field-service work. These gains were partly offset by lower power-supply program sales stemming from contract completions and planned customer delivery schedules. Gross profit benefited from higher sales volume, a favorable product mix, above-average margins on completed milestone sales and the use of lower-cost labor groups than originally budgeted. 

Management also highlighted continued supply-chain challenges. Demand across the power-electronics industry has resulted in component shortages and extended lead times, with some components taking close to a year or longer to obtain. The company also continues to face part-obsolescence issues and recruiting challenges for positions requiring specialized skills.

Factors Influencing Espey’s Results

Product mix remained an important determinant of profitability. Espey noted that mature products and build-to-print contracts typically carry higher gross margins than products in engineering development or early production. Consequently, the mix between higher-margin mature programs and less-mature engineering programs can materially affect gross profit and net income. 

For the full fiscal year, higher sales, improved gross margins and increased other income supported net income growth. These benefits were partly offset by higher selling, general and administrative expenses and an increased income-tax provision.

Espey’s Guidance

Management expects fiscal 2027 revenues to exceed fiscal 2026 levels. However, the sales mix is expected to include new products requiring heavier engineering investment, which could temporarily pressure gross profit. Manufacturing scaling and efficiency initiatives are expected to partly offset those costs. Management also expects fiscal 2027 new orders to meet or exceed fiscal 2026 levels, when the company received approximately $41.4 million in new orders. 

Inflationary costs are expected to continue, though management does not anticipate a significant impact on fiscal 2027 operating income. Capital expenditures are expected to remain below $0.5 million for fiscal 2027, excluding upgrades funded through grants.