One-glance verdict
Overvalued
$10.47 our estimate vs market $24.78
Wall Street consensus: $31.50 (200.9% higher than our fair-value estimate)
137% above our estimate, beyond the bull case
Fundamentals snapshot
Innovative Solutions and Support Inc
ISSC · NMS · Industrials · Aerospace & Defense
Current price
$24.78
52-week range
$8.13 - $30.94
Market cap
$443.54M
Balance sheet
Watch
11.63x Adequate
Net debt $43.62M. Interest coverage shows how many times profit covers the interest bill.
What stands out
2 Rewards
2 Risks
2 rewards · 2 risks
- Reward Revenue grew 78.6% last year.
- Reward Free cash flow was positive in 4/10 years.
- Risk Forward P/E (23.8x) is higher than trailing (21.7x) - earnings are expected to drop.
- Risk Operating margin compressed from 26.0% to 23.7% over 3 years.
What this company does
Innovative Solutions and Support Inc
Innovative Aerosystems (formerly Innovative Solutions and Support) makes sophisticated electronic systems for aircraft, like special throttles and navigation tools. Their main customers are commercial airlines and military branches, and this business matters because these complex parts are crucial for safe and efficient flying.
How the company got here
Innovative Solutions and Support, Inc. (ISSC), now known as Innovative Aerosystems, Inc., was founded in 1988 by Geoffrey S. M. Hedrick. Hedrick, a visionary in the aerospace industry, aimed to create innovative avionics solutions backed by strong customer support. The company initially focused on developing critical avionics for military aircraft, such as digital fuel quantity systems and engine instruments for the C-130 transport plane. A significant turning point came in the late 1990s when ISSC began developing retrofit kits to meet new Reduced Vertical Separation Minimums (RVSM) standards, which required more accurate instruments. This led to a surge in demand for their air data systems and drove revenue growth. The company also expanded into developing flat panel display systems for commercial airliners and completed an initial public offering (IPO) on the NASDAQ stock exchange in 2000. In October 2025, the company officially changed its name to Innovative Aerosystems, Inc., reflecting its evolved focus on integrating advanced avionics with intelligent system designs.
What it actually does
Innovative Aerosystems designs, engineers, manufactures, and supplies advanced avionics solutions for a wide range of aircraft. Avionics refers to the electronic systems used on aircraft, including navigation, communication, flight control, and display systems. The company serves both commercial airlines and military clients, providing solutions for both new aircraft (Original Equipment Manufacturers or OEMs) and for upgrading older aircraft (retrofit applications). Their products are designed to enhance operational efficiency, improve safety, and reduce pilot workload. Innovative Aerosystems holds a significant portfolio of patents, protecting its intellectual property and innovations in the field of aerospace technology.
Integrated Flight Deck Systems
This segment focuses on creating advanced cockpit systems that provide pilots with comprehensive flight information and control. These systems include integrated flight displays, which are essentially digital screens that replace traditional analog gauges, showing critical information like altitude, speed, and engine performance. They also encompass crew alerting systems that warn pilots of potential issues and mission displays for military applications. The goal is to present complex flight data in a clear, intuitive way, improving pilot situational awareness (a pilot's understanding of what is happening around the aircraft) and decision-making. This part of the business is crucial for modernizing older aircraft and equipping new ones with state-of-the-art cockpits.
Navigation Systems
This business line provides the electronic tools that help aircraft navigate accurately from one point to another. It includes Flight Management Systems (FMS), which are essentially onboard computers that automate various aspects of flight planning and execution, helping pilots fly more efficiently. The company also offers LPV Navigators, which enable more precise approaches to runways, especially in challenging weather conditions. These systems are vital for ensuring aircraft stay on course, optimize fuel consumption, and adhere to air traffic control instructions, contributing to both safety and efficiency in flight operations.
Communication and Surveillance Systems
This area of the business provides the equipment that allows aircraft to communicate with air traffic control and other aircraft, as well as to be tracked. It includes COM/NAV (Communication/Navigation) radios, which are essential for voice communication and receiving navigation signals. Radio management systems are also part of this segment, helping pilots manage various communication and navigation frequencies efficiently. These systems are fundamental for maintaining contact with the ground and other aircraft, ensuring safe separation and coordination in the busy skies.
Autothrottle and Flight Control Systems
This segment offers systems that assist pilots in controlling the aircraft's engines and flight path. The ThrustSense® Autothrottle is a key product, which automatically manages the engine power settings to maintain desired speed and reduce pilot workload, especially during critical phases of flight. These systems are designed to enhance safety by providing precise control and reducing the potential for human error. By automating certain control functions, autothrottles allow pilots to focus more on managing the overall flight and responding to changing conditions.
What management is betting on now
Management is focused on leveraging the company's expertise in advanced avionics to capitalize on emerging trends in aviation, particularly autonomous flight. They are investing in developing next-generation navigation systems, advanced flight deck technologies, and intelligent system designs that integrate seamlessly with aircraft operations. The company is also expanding its capabilities through strategic acquisitions, such as integrating product lines from Honeywell, which enhances their service offerings and revenue streams. By focusing on innovation, expanding their product portfolio, and strengthening their position in both the OEM and retrofit markets, Innovative Aerosystems aims to drive future growth and maintain its leadership in the aerospace industry.
Price history
How the share price has moved
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Is it cheap or expensive?
Fair value $10.47 vs current price $24.78
Wall Street consensus is the average analyst price target: $31.50 (200.9% higher than our fair-value estimate).
Our most-likely fair value is $10.47 a share — about 57.8% below today's price of $24.78, so the stock currently looks expensive (overvalued).
Is it drowning in debt?
Watch
Net debt $43.6M. Interest coverage 11.6x.
Net debt
$43.62M
Interest coverage
11.63x
Innovative Solutions and Support Inc is healthier than 0 of 1 peers on balance-sheet leverage.
Watch
Worse cushion
Baseline
Better cushion
ISSC
BASELINE
Innovative Solutions and Support Inc
Total debt $54.31M Interest coverage 11.63x This is the baseline the peer rows are being compared against.
What you should know
The case for and against ISSC
2 Rewards
2 Risks
Rewards
-
Revenue grew 78.6% last year.
-
Free cash flow was positive in 4/10 years.
Risks
-
Forward P/E (23.8x) is higher than trailing (21.7x) - earnings are expected to drop.
-
Operating margin compressed from 26.0% to 23.7% over 3 years.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
21.74x
Forward P/E
23.75x
P/B
5.75x
P/S
4.76x
EV/EBITDA
15.90x
PEG ratio
0.83x
Profitability
How much profit each dollar creates
Gross margin
54.9%
Operating margin
23.7%
Net margin
20.5%
ROE
28.5%
ROA
13.8%
Health
Liquidity and balance-sheet strength
Debt / equity
0.70x
Current ratio
2.97x
Quick ratio
1.33x
Total debt
$54.31M
Total cash
$10.69M
Growth
How the business has been compounding
Revenue TTM
$93.15M
Revenue 5Y CAGR
44.8%
EPS TTM
1.14
EPS 5Y CAGR
40.1%
Cash flow
How much cash the business throws off
Operating CF TTM
$13.30M
Free CF TTM
$6.79M
FCF margin
7.3%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
2020-12-18