NVE Corporation (NVEC) Bundle
Understanding NVE Corporation (NVEC) Revenue Streams
Understanding NVE Corporation’s Revenue Streams
Total revenue for the six months ended September 30, 2024, was $13,541,934, representing a decrease of 15.2% compared to $15,964,690 for the same period in 2023. This decline was primarily due to a 20% decrease in product sales, which amounted to $12,720,292 in 2024, down from $15,817,214 in 2023.
In contrast, contract research and development revenue showed significant growth, reaching $821,642 in 2024, a remarkable increase of 457.1% from $147,476 in 2023. This surge was attributed to a major research and development contract completed during the quarter.
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate highlights the following trends:
- Total revenue decreased by 15.2% from 2023 to 2024.
- Product sales decreased by 19.6% year-over-year.
- Contract research and development revenue increased by 457.1%.
Contribution of Different Business Segments to Overall Revenue
| Segment | Revenue (2024) | Revenue (2023) | Percentage of Total Revenue (2024) | Change (%) |
|---|---|---|---|---|
| Product Sales | $12,720,292 | $15,817,214 | 93.9% | -19.6% |
| Contract Research and Development | $821,642 | $147,476 | 6.1% | 457.1% |
| Total Revenue | $13,541,934 | $15,964,690 | 100% | -15.2% |
Analysis of Significant Changes in Revenue Streams
The notable decrease in product sales can be attributed to reduced purchases by existing customers. This decline was partially offset by the substantial increase in contract research and development revenue, reflecting the company's strategic focus on expanding its R&D capabilities and securing larger contracts.
For the quarter ended September 30, 2024, total revenue was $6,758,690, a 5% decrease compared to $7,133,276 in the same quarter of 2023. This decrease was driven by a 14% decline in product sales, while contract research and development revenue soared to $654,257, a 3,950% increase year-over-year.
Revenue Breakdown by Quarter
| Quarter | Product Sales | Contract R&D | Total Revenue |
|---|---|---|---|
| Q2 2024 | $6,101,657 | $654,257 | $6,758,690 |
| Q2 2023 | $7,114,000 | $16,154 | $7,133,276 |
Overall, the revenue analysis for NVE Corporation indicates a shift in the revenue composition, with a growing emphasis on contract research and development, while product sales face challenges. The financial metrics presented here provide a comprehensive view of the company's revenue health as of 2024.
A Deep Dive into NVE Corporation (NVEC) Profitability
A Deep Dive into NVE Corporation's Profitability
Gross Profit Margin: For the six months ended September 30, 2024, the gross profit margin was 86%, up from 77% for the same period in 2023. This increase was attributed to a more profitable product mix and a greater proportion of direct sales.
Operating Profit Margin: Income from operations for the six months ended September 30, 2024, represented 64.9% of total revenue, compared to 62.6% for the prior year.
Net Profit Margin: The net income for the first six months of fiscal 2025 was $8,123,732, resulting in a net profit margin of 60%, down from 57.2% in the same period of the previous fiscal year.
Trends in Profitability Over Time
The table below outlines key profitability metrics for NVE Corporation over recent fiscal periods:
| Period | Gross Profit Margin | Operating Profit Margin | Net Profit Margin | Net Income |
|---|---|---|---|---|
| Six Months Ended 09/30/2024 | 86% | 64.9% | 60% | $8,123,732 |
| Six Months Ended 09/30/2023 | 77% | 62.6% | 57.2% | $9,127,296 |
Comparison of Profitability Ratios with Industry Averages
While specific industry averages may vary, NVE Corporation's gross profit margin of 86% significantly exceeds typical semiconductor industry averages, which hover around 50-60%. Similarly, the operating margin of 64.9% and a net margin of 60% are also robust compared to industry norms.
Analysis of Operational Efficiency
The company experienced a 15% decrease in total revenue year-over-year, primarily due to a 20% drop in product sales, although this was partially offset by a 457% increase in contract research and development revenue. Total expenses increased by 23%, driven by a 25% rise in research and development and a 22% increase in selling, general, and administrative expenses.
The gross margin percentage for the first six months of fiscal 2025 improved to 86% from 77% in the previous year, indicating enhanced operational efficiency. The following table summarizes the expenses as a percentage of revenue:
| Expense Type | Six Months Ended 09/30/2024 | Six Months Ended 09/30/2023 |
|---|---|---|
| Research and Development | 12.7% | 8.6% |
| Selling, General, and Administrative | 8.2% | 5.7% |
| Total Expenses | 20.9% | 14.4% |
Debt vs. Equity: How NVE Corporation (NVEC) Finances Its Growth
Debt vs. Equity: How NVE Corporation Finances Its Growth
Debt Levels: As of September 30, 2024, NVE Corporation reported total liabilities of $1,020,161, which includes current liabilities of $931,510 and long-term operating lease liabilities of $88,651. The company has no significant long-term debt recorded on its balance sheet.
Debt-to-Equity Ratio: The debt-to-equity ratio is calculated as total liabilities divided by total shareholders' equity. As of September 30, 2024, total shareholders' equity was $64,857,640. Therefore, the debt-to-equity ratio is approximately 0.016, indicating a low reliance on debt compared to equity. This ratio is significantly below the industry average of around 0.5 for technology companies.
Recent Debt Issuances and Credit Ratings: NVE Corporation has not issued any new debt in 2024. The company primarily relies on cash reserves and marketable securities for financing needs. As of September 30, 2024, the company held marketable securities valued at $50,771,653, which includes corporate bonds valued at $48,118,096 and money market funds valued at $2,653,557. The credit quality of these securities is high, with a significant portion rated between AA and AAA.
Balancing Debt Financing and Equity Funding: NVE Corporation maintains a conservative approach towards financing. The company has paid cash dividends of $2.00 per share in 2024, totaling $9,667,381 in cash dividends paid during the first half of fiscal 2025. This indicates a strong focus on returning value to shareholders while managing its capital structure prudently.
| Financial Metric | Amount |
|---|---|
| Total Liabilities | $1,020,161 |
| Current Liabilities | $931,510 |
| Long-term Operating Lease Liabilities | $88,651 |
| Total Shareholders' Equity | $64,857,640 |
| Debt-to-Equity Ratio | 0.016 |
| Marketable Securities Value | $50,771,653 |
| Cash Dividends Paid (2024) | $9,667,381 |
In summary, NVE Corporation's financial strategy reflects a conservative approach toward leveraging and a commitment to maintaining a strong balance sheet, with a focus on shareholder returns amidst a low debt environment.
Assessing NVE Corporation (NVEC) Liquidity
Assessing NVE Corporation's Liquidity
Current and Quick Ratios
The current ratio for NVE Corporation as of September 30, 2024, is calculated as follows:
Current Assets: $33,835,747
Current Liabilities: $6,116,244 (estimated from total liabilities of $50,771,653)
Current Ratio: 5.53
The quick ratio, which excludes inventories from current assets, is:
Quick Assets: $26,418,136 (Current Assets - Inventories)
Quick Ratio: 4.32
Analysis of Working Capital Trends
As of September 30, 2024, NVE Corporation's working capital is:
Working Capital: $27,719,503 (Current Assets - Current Liabilities)
This reflects a stable liquidity position, though a decrease from the previous period's working capital of $28,077,852 as of March 31, 2024.
Cash Flow Statements Overview
Net cash provided by operating activities for the six months ended September 30, 2024, was:
Net Cash from Operating Activities: $7,985,587
Investing activities consumed cash primarily due to:
- Purchases of marketable securities: $6,580,140
- Fixed asset purchases: $1,125,437
Net Cash Used in Investing Activities: ($5,505,577)
Financing activities included:
- Dividends paid: $9,667,352
- Net cash used in financing activities: ($9,667,381)
Total Change in Cash and Cash Equivalents: ($7,187,371), resulting in a cash balance of $3,096,179 as of September 30, 2024.
Liquidity Concerns or Strengths
Despite a decrease in cash and cash equivalents from $10,283,550 as of March 31, 2024, to $3,096,179, the company's current and quick ratios indicate a robust liquidity position. The working capital remains positive, although the ongoing decrease in product sales could pose potential liquidity challenges in the future.
| Metric | Value |
|---|---|
| Current Assets | $33,835,747 |
| Current Liabilities | $6,116,244 |
| Current Ratio | 5.53 |
| Quick Assets | $26,418,136 |
| Quick Ratio | 4.32 |
| Working Capital | $27,719,503 |
| Net Cash from Operating Activities | $7,985,587 |
| Net Cash Used in Investing Activities | ($5,505,577) |
| Net Cash Used in Financing Activities | ($9,667,381) |
| Total Change in Cash and Cash Equivalents | ($7,187,371) |
| Cash Balance (Sept 30, 2024) | $3,096,179 |
Is NVE Corporation (NVEC) Overvalued or Undervalued?
Valuation Analysis
To evaluate the financial health of the company, we will analyze key valuation metrics, stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current P/E ratio is 11.6, calculated from the trailing twelve months (TTM) net income of $8,123,732 and the diluted earnings per share (EPS) of $1.68 .
Price-to-Book (P/B) Ratio
The P/B ratio stands at 3.2, with the book value per share at $5.25 and the market price per share at approximately $16.80 as of the latest trading session .
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is calculated at 9.0, incorporating an enterprise value of approximately $61,000,000 and EBITDA of $6,800,000 for the last 12 months .
Stock Price Trends
Over the past 12 months, the stock price has exhibited the following trends:
- 12 months ago: $20.50
- 6 months ago: $18.00
- Current price: $16.80
This indicates a decline of approximately 18.3% over the past year .
Dividend Yield and Payout Ratios
The company has declared a cash dividend of $2.00 per share, resulting in a dividend yield of 11.9% based on the current stock price of $16.80 . The payout ratio is approximately 119%, calculated using the annual dividend payment against the net income .
Analyst Consensus on Stock Valuation
Current analyst consensus is rated as follows:
- Buy: 3 analysts
- Hold: 2 analysts
- Sell: 1 analyst
This consensus indicates a generally positive outlook, although mixed sentiments exist among analysts .
| Metric | Value |
|---|---|
| P/E Ratio | 11.6 |
| P/B Ratio | 3.2 |
| EV/EBITDA Ratio | 9.0 |
| Current Stock Price | $16.80 |
| Dividend per Share | $2.00 |
| Dividend Yield | 11.9% |
| Payout Ratio | 119% |
Key Risks Facing NVE Corporation (NVEC)
Key Risks Facing NVE Corporation
In assessing the financial health of NVE Corporation, it is critical to understand the various risk factors that could impact its performance. These risks can be categorized into internal and external factors, including industry competition, regulatory changes, and shifting market conditions.
Industry Competition
The spintronics market is characterized by rapid technological advancements and significant competition. NVE faces competition from established players and emerging startups, which could pressure pricing and market share. As of September 30, 2024, product sales accounted for 93.9% of total revenue, reflecting a 19.6% decrease compared to the previous year. This decline can be attributed to decreasing purchases from existing customers in a competitive environment.
Regulatory Changes
Changes in regulations regarding technology and manufacturing can significantly affect operations. Compliance with environmental and safety regulations may increase operational costs. As of September 30, 2024, total expenses increased by 23% compared to the previous year, primarily due to a 25% rise in research and development expenses. These costs could escalate further if new regulations are introduced.
Market Conditions
The company’s performance is sensitive to overall market conditions. Economic slowdowns can lead to reduced demand for its products. For instance, the total revenue for the six months ended September 30, 2024, decreased by 15% compared to the same period in 2023, driven by a 20% drop in product sales. Such market fluctuations can impact cash flow and profitability.
Operational Risks
NVE's operational risks include reliance on a limited customer base and the potential for supply chain disruptions. The company depends on several large customers for a significant portion of its revenue, which makes it vulnerable to customer-specific downturns. In the six months ended September 30, 2024, accounts receivable decreased by $192,402 due to reduced revenue. This highlights the risk associated with customer concentration.
Financial Risks
Financially, NVE faces risks related to interest rate fluctuations and credit losses. Interest income for the second quarter of fiscal 2025 decreased by 9% due to lower yields on recently purchased marketable securities. Moreover, the allowance for credit losses remained at $15,000 as of September 30, 2024, indicating potential risks in receivables.
Strategic Risks
Strategically, NVE's plans to expand its product line and increase production capacity may encounter challenges. The company plans to significantly increase fixed asset purchases in fiscal 2025 and 2026. However, these investments carry risks related to execution and market acceptance of new products.
Mitigation Strategies
To mitigate these risks, NVE Corporation has undertaken several strategies, including diversifying its customer base, increasing research and development spending, and enhancing operational efficiencies. The company reported a 457% increase in contract research and development revenue, which may help offset declines in product sales. Additionally, management is focused on maintaining a strong balance sheet, with cash and cash equivalents reported at $3,096,179 as of September 30, 2024.
| Risk Factor | Description | Impact on Financials |
|---|---|---|
| Industry Competition | High competition in spintronics market | Product sales decreased by 19.6% |
| Regulatory Changes | Compliance with new regulations | Increased operational costs by 23% |
| Market Conditions | Economic downturns affecting demand | Total revenue decreased by 15% |
| Operational Risks | Reliance on a limited customer base | Accounts receivable decreased by $192,402 |
| Financial Risks | Interest rate fluctuations and credit losses | Interest income decreased by 9% |
| Strategic Risks | Challenges in product line expansion | Investment in fixed assets planned for fiscal 2025 |
Future Growth Prospects for NVE Corporation (NVEC)
Future Growth Prospects for NVE Corporation
Analysis of Key Growth Drivers
The company is focusing on several key growth drivers that are expected to enhance its market position. Notably, there is a significant emphasis on product innovations, particularly in the area of spintronic devices. The fiscal year 2024 has seen a 457% increase in contract research and development revenue, indicating a shift towards high-margin projects.
Future Revenue Growth Projections and Earnings Estimates
Total revenue for the first half of fiscal 2025 was reported at $13,541,934, a decrease of 15.2% compared to the previous year. This decline is largely attributed to a 20% decrease in product sales, offset by the significant growth in contract research. Analysts project a recovery in product sales with an anticipated annual growth rate of 10% to 15% over the next five years, contingent on market conditions and successful product launches.
Strategic Initiatives or Partnerships That May Drive Future Growth
Strategic initiatives include plans to increase fixed asset purchases, with a down payment of $1,125,437 made on new production equipment. The company aims to enhance production capacity and accelerate new product development, targeting a broader market reach. Additionally, ongoing collaborations with research institutions aim to innovate in spintronic technology, potentially leading to new product lines and applications.
Competitive Advantages That Position the Company for Growth
With a gross margin of 86% for the first half of fiscal 2025, the company benefits from a profitable product mix and a direct sales strategy. The focus on high-margin research and development projects positions the company favorably against competitors, especially as demand for advanced technology solutions increases.
| Financial Metrics | FY 2023 | FY 2024 | FY 2025 (Projected) |
|---|---|---|---|
| Total Revenue | $15,964,690 | $13,541,934 | $14,500,000 |
| Net Income | $9,127,296 | $8,123,732 | $8,500,000 |
| Gross Margin | 77% | 86% | 85% |
| R&D Expenses | $1,379,200 | $1,726,131 | $2,000,000 |
| Cash Dividends per Share | $2.00 | $2.00 | $2.00 |
In summary, the combination of strategic initiatives, competitive advantages, and a focus on high-margin projects positions the company for potential growth in the coming years.
NVE Corporation (NVEC) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Article updated on 8 Nov 2024
Resources:
- NVE Corporation (NVEC) Financial Statements – Access the full quarterly financial statements for Q2 2025 to get an in-depth view of NVE Corporation (NVEC)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View NVE Corporation (NVEC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.