Introduction to Electro Optic Systems (ASX:EOS)
Electro Optic Systems Holdings Limited (EOS.AX) is a leader in developing, manufacturing, and selling advanced technology products tailored for defense and space applications. The company focuses on fire control, surveillance, and weapon systems, including innovative anti-drone technologies and remote weapon systems, which give it a competitive edge in the defense sector. EOS’s unique selling points include its pioneering work in laser weapons and modular counter-UAS systems, alongside its expertise in optical and microwave technologies for satellite communications. Primarily operating in the defence and space markets, EOS serves clients across Australia, the US, Singapore, UAE, New Zealand, and Germany, with a significant market presence in North America.
https://eos-aus.com/
Fundamental analysis
It’s been a bumpy ride for long-term shareholders of Electro Optic Systems. This is their revenue history. Half the time it goes up and half the time it falls. However, revenues have been rising consistently since the end of 2022 to be as high today, as they’ve ever been.
The story for earnings is more ugly although their most recent numbers were perhaps a sign that things are getting on track.
Cash flows certainly give more weight to that argument.
Electro Optic Systems (ASX:EOS) has some debt. It’s not a massive amount but unfortunately it’s at pretty high interest rates. Any announcement of refinancing on better terms would be received positively by the market you would think. Their improved cash-flows should assist in them achieving a better outcome.
Analysts are forecasting for EBITDA to turn positive this year and to continue improving.
According to my moving average system and trailing ATR stop (red zone), the share price turned positive back in September 2022. Only the true believers would have bought in back then but as time has past, Electro Optic Systems (ASX:EOS)Â has looked more and more like the worst is now behind the company.
Final thoughts
Electro Optic Systems (ASX:EOS) is a company trying to bounce back from a pretty difficult period. With a string of improving results, the market has started to take notice. A near-term catalyst for further improvement would be to see them improve the terms of their ~$160M debt burden. If they can do that, while continuing to reduce the overall debt balance, along with further revenue growth, the bottom line could improve at a very rapid rate indeed. That’s a big “if” for a company with such an inconsistent record though so it’s by no means a given.
Disclaimer: This information is provided purely for educational purposes. It takes no account of an individual’s personal financial circumstances and hence can in no way constitute financial advice. The above data may be subject to errors or inconsistencies for which the author takes no liability. It is imperative that all investors do their own research or if they need advice, seek it from a qualified financial adviser.