Nasdaq:NVEC
NVE CORP /NEW/
A specialized provider of ruggedized electronic components serving the aerospace and defense industries with a focus on high-reliability manufacturing.
Key Metrics
Investment Thesis
Bull Case
The stock may be attractive for value investors seeking a low price-to-book ratio given its significant retained earnings deficit relative to total equity. As a niche player in the defense sector, NVE Corp offers exposure to government spending that is often recession-resistant. The strong operating cash flow generation suggests the business can survive independently and potentially re-rate higher if revenue stabilizes.
Bear Case
The consistent year-over-year decline in both revenue and net income over the last three years signals a deteriorating fundamental business trend. Aggressive cash usage from financing activities of $19.2M reduces capital available for growth initiatives or R&D expansion. With accounts receivable significantly lower than inventory, there may be collection issues or a shift to just-in-time supply chain models that threaten working capital efficiency.
About NVE CORP /NEW/
NVE Corp designs and manufactures high-performance electronic components for aerospace, defense, and industrial markets. The company leverages advanced semiconductor packaging technologies to serve critical sectors requiring reliability under extreme conditions. Recent financials reflect a focus on operational efficiency despite a contraction in total revenue.
Analysis
Management Discussion
Management has successfully maintained positive operating cash flow of $14.3M despite a 32% revenue drop from 2023 to 2025, indicating strong cost control. The reduction in net income from $22.7M to $15.1M reflects margin pressure likely due to the shrinking revenue base and increased operating expenses relative to sales. Despite the decline, the company retains substantial long-term marketable securities, providing a buffer against liquidity shocks.
Industry Overview
The electronic components industry is characterized by high barriers to entry due to stringent quality certifications required for aerospace and defense applications. Companies in this sector face pressure from rising material costs and the need for continuous technological innovation to meet evolving system requirements. Consolidation is common as smaller players struggle with R&D costs, favoring established firms with proven track records.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Revenue | $38.3M | $29.8M | $25.9M |
| Cost of Revenue | $8.1M | $6.8M | $4.2M |
| Gross Profit | $30.2M | $23.0M | $21.6M |
| Operating Expenses | $4.5M | $4.5M | $5.6M |
| Operating Income | $25.6M | $18.5M | $16.0M |
| R&D | $2.6M | $2.7M | $3.6M |
| D&A | $257.6K | $308.1K | $324.2K |
| Depreciation | $196.7K | $308.1K | $324.2K |
| Other OpEx | $2.0M | $1.8M | $2.0M |
| Non-Operating Income | $1.4M | $1.9M | $2.0M |
| Interest Income | $1.4M | $1.9M | $1.9M |
| Pre-Tax Income | $27.1M | $20.5M | $18.0M |
| Income Tax | $4.4M | $3.3M | $3.0M |
| Continuing Ops | $22.7M | $17.1M | $15.1M |
| Discontinued Ops | $0 | $0 | $0 |
| Net Income | $22.7M | $17.1M | $15.1M |
| Minority Interest | $0 | $0 | $0 |
| Net to Common | $22.7M | $17.1M | $15.1M |
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Current Assets | $30.8M | $33.2M | $33.2M |
| Cash & Equivalents | $1.7M | $10.3M | $8.0M |
| Marketable Securities | $15.5M | $11.9M | $13.7M |
| Accounts Receivable | $6.5M | $3.1M | $3.6M |
| Inventory | $6.4M | $7.2M | $7.4M |
| Other Current Assets | $663.5K | $689.3K | $433.4K |
| Long-Term Assets | $38.5M | $33.6M | $31.1M |
| Operating Leases | $425.8K | $289.9K | $917.3K |
| LT Securities | $36.1M | $30.8M | $26.3M |
| Other LT Assets | $1.9M | $2.5M | $3.9M |
| Total Assets | $69.3M | $66.8M | $64.3M |
| Current Liabilities | $1.8M | $1.0M | $1.2M |
| Accounts Payable | $281.7K | $127.2K | $214.7K |
| Current Leases | $175.8K | $179.4K | $83.0K |
| Other Current Liab | $0 | $0 | $0 |
| Long-Term Liabilities | $342.9K | $175.8K | $838.2K |
| LT Operating Leases | $342.9K | $175.8K | $838.2K |
| Other LT Liab | $0 | $0 | $0 |
| Total Liabilities | $2.2M | $1.2M | $2.0M |
| Shareholders' Equity | $67.1M | $65.6M | $62.3M |
| Paid-In Capital | $19.3M | $19.6M | $19.8M |
| Retained Earnings | $48.9M | $46.7M | $42.5M |
| AOCI | $-1.2M | $-777.6K | $-68.5K |
| Total L&E | $69.3M | $66.8M | $64.3M |
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Net Income (CFO) | $22.7M | $17.1M | $15.1M |
| Non-Cash Adjustments | $-6.2M | $4.8M | $-1.5M |
| Working Capital Changes | $2.6M | $-3.7M | $708.5K |
| Cash from Operations | $19.1M | $18.2M | $14.3M |
| Capital Expenditures | $935.8K | $16.7K | $1.3M |
| Cash from Investing | $-8.5M | $9.6M | $2.7M |
| Share Buybacks | $20.7K | $0 | — |
| Dividends Paid | $19.3M | $19.3M | $19.3M |
| Cash from Financing | $-19.3M | $-19.2M | $-19.2M |
| FX Effect | $0 | $0 | $0 |
| Net Change in Cash | $-8.8M | $8.6M | $-2.2M |
| Beginning Cash | $10.4M | $1.7M | $10.3M |
| Ending Cash | $1.7M | $10.3M | $8.0M |
Frequently Asked Questions
How does NVE CORP /NEW/ make money?
The company's revenue is primarily driven by sales of discrete semiconductors, custom integrated circuits, and subsystems for aerospace applications. A secondary stream comes from industrial automation components designed for harsh environments. Additional revenue is generated through government defense contracts requiring rigorous qualification standards.
What are the main risks for NVEC?
Revenue decline over the last three years indicates potential market saturation or loss of key government contracts. Significant cash outflows from financing activities suggest aggressive debt repayment or share buybacks impacting liquidity. High levels of retained earnings deficits could limit future growth investments if profitability does not improve. Dependence on a niche market makes the company vulnerable to cyclical downturns in aerospace spending.
What is NVEC's competitive advantage?
NVE Corp maintains a competitive moat through deep technical expertise in high-reliability packaging processes that withstand extreme temperatures and shock. The company benefits from long-term relationships with major aerospace OEMs where switching suppliers involves significant validation costs and time. Proprietary process technologies allow for cost-efficient production of specialized components that competitors cannot easily replicate.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.