One-glance verdict
Overvalued
$47.57 our estimate vs market $146.56
Wall Street consensus: $194.50 (308.9% higher than our fair-value estimate)
208% above our estimate, beyond the bull case
Fundamentals snapshot
Novanta Inc.
NOVT · NMS · Technology · Scientific & Technical Instruments
Current price
$146.56
52-week range
$98.27 - $176.38
Market cap
$5.54B
Balance sheet
Healthy
5.43x Adequate
Net cash $433.05M. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
3 Risks
3 rewards · 3 risks
- Reward Revenue grew 5.0% last year.
- Reward Returns 5.1% on equity, ahead of 16% of its peers.
- Risk Stock trades 17.2% above its 5-year average P/E.
- Risk Operating margin compressed from 12.5% to 11.5% over 3 years.
What this company does
Novanta Inc.
Novanta makes the high-tech "guts" for complex machines, like the laser systems used in eye surgery or the robotic arms in a factory. The company's money comes from selling these critical components to other manufacturers, split between its medical technology and its precision manufacturing divisions. This is important because Novanta's parts are often essential for their customers' final products, making them a key supplier in the advanced technology and healthcare fields.
How the company got here
Novanta started in 1968 as a company called General Scanning, Inc., focusing on laser-based technology. After merging with another company and being known as GSI Group for a while, it renamed itself Novanta in 2016 to signal a new direction. Over the years, it has shifted its focus to making highly specialized parts for medical and advanced industrial equipment. A key part of its growth has been acquiring (buying) other companies with specific technologies to expand its expertise and product offerings.
What it actually does
Novanta doesn't sell products directly to everyday consumers. Instead, it creates and sells critical, high-performance components to other manufacturers, often called OEMs (Original Equipment Manufacturers). These manufacturers then build Novanta's technology into their own complex machines. Think of Novanta as making the high-tech 'ingredients'—like precision lasers, scanners, and motion controllers—for applications where extreme accuracy is crucial, such as robotic surgery, factory automation, and scientific research equipment.
Automation Enabling Technologies
This is Novanta's largest business segment, making up about half of its sales. It creates the tools that allow factories and machines to perform highly precise tasks automatically. This includes things like laser systems that can cut or mark materials with incredible accuracy, and robotic components that enable machines to move and handle objects with precision. The customers are typically manufacturers in industries like electronics and robotics who need these components for their automated production lines.
Medical Solutions
This segment provides specialized technology for medical devices used in hospitals and labs. It makes things like medical-grade insufflators (devices that help create a clear view during surgery by gently inflating an area with gas), pumps for medical fluids, and advanced imaging and scanning solutions. These components are sold to medical device companies that use them in equipment for applications like minimally invasive surgery, patient monitoring, and scientific analysis. Following a recent acquisition (the buying of another company), this part of the business is growing, especially in medical consumables (disposable items used in procedures).
What management is betting on now
The company's main strategy is to focus on high-growth, specialized markets like robotic surgery, factory automation, and precision medicine. They plan to grow by investing in new product development and by making strategic acquisitions (buying other companies that fit well with their business), like the recent purchase of Riverpoint Medical to expand into surgical supplies. Management is also focused on improving its profitability by streamlining its manufacturing operations to be more efficient and resilient to supply chain (the network of companies that get products from raw materials to the customer) disruptions.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q4
$59.31M
FY2025 Q1
$27.40M
FY2025 Q2
$11.68M
FY2025 Q3
$4.21M
FY2025 Q4
$5.13M
FY2026 Q2
$47.47M
FY2026 Q3
$57.47M
Revenue
$265.81M
Net income
$12.54M
Diluted EPS
0.30
Operating cash flow
$64.93M
Free cash flow
$57.47M
Fetching…
Sources
Revenue
$257.71M
Net income
$21.10M
Diluted EPS
0.51
Operating cash flow
$51.61M
Free cash flow
$47.47M
Fetching…
Sources
Revenue
$258.35M
Net income
$17.47M
Diluted EPS
0.46
Operating cash flow
$8.80M
Free cash flow
$5.13M
Fetching…
Sources
Revenue
$247.84M
Net income
$10.65M
Diluted EPS
0.30
Operating cash flow
$8.49M
Free cash flow
$4.21M
Fetching…
Sources
Revenue
$241.05M
Net income
$4.50M
Diluted EPS
0.12
Operating cash flow
$15.07M
Free cash flow
$11.68M
Fetching…
Sources
Revenue
$233.37M
Net income
$21.21M
Diluted EPS
0.59
Operating cash flow
$31.68M
Free cash flow
$27.40M
Fetching…
Sources
Revenue
$238.06M
Net income
$16.46M
Diluted EPS
0.45
Operating cash flow
$61.56M
Free cash flow
$59.31M
Fetching…
Sources
Is it cheap or expensive?
Fair value $47.57 vs current price $146.56
Wall Street consensus is the average analyst price target: $194.50 (308.9% higher than our fair-value estimate).
Our most-likely fair value is $47.57 a share — about 67.5% below today's price of $146.56, so the stock currently looks expensive (overvalued).
Is it drowning in debt?
Healthy
Net cash $433.1M - more cash than debt. Interest coverage 5.4x.
Net debt
$-433.05M
Interest coverage
5.43x
Novanta Inc.'s profit covers its interest bill about 5.4 times over. which is stronger than most peers shown here and 1 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Healthy
Worse cushion
Baseline
Better cushion
NOVT
BASELINE
Novanta Inc.
Total debt $285.60M Interest coverage 5.43x This is the baseline the peer rows are being compared against.
Total debt $4.19B Interest coverage 2.48x -54% vs NOVT Carries about 2.2x less debt cushion than NOVT.
Total debt $3.55B Interest coverage 4.74x -13% vs NOVT Has roughly the same debt cushion as NOVT.
Total debt $2.03B Interest coverage 19.29x +255% vs NOVT Carries about 3.6x more debt cushion than NOVT.
Total debt $16.25M Interest coverage 0.77x -86% vs NOVT Carries about 7.0x less debt cushion than NOVT.
What you should know
The case for and against NOVT
3 Rewards
3 Risks
Rewards
-
Revenue grew 5.0% last year.
-
Returns 5.1% on equity, ahead of 16% of its peers.
-
Free cash flow was positive in 10/10 years.
Risks
-
Stock trades 17.2% above its 5-year average P/E.
-
Operating margin compressed from 12.5% to 11.5% over 3 years.
-
Insider ownership is only 0.7% (peer median: 0.8%).
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)
92.76x
Forward P/E
33.56x
P/B
3.43x
P/S
5.38x
EV/EBITDA
28.24x
PEG ratio
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Profitability
How much profit each dollar creates
Gross margin
44.5%
Operating margin
11.5%
Net margin
6.0%
ROE
5.1%
ROA
4.1%
Health
Liquidity and balance-sheet strength
Debt / equity
0.18x
Current ratio
4.57x
Quick ratio
3.65x
Total debt
$285.60M
Total cash
$718.65M
Growth
How the business has been compounding
Revenue TTM
$1.03B
Revenue 5Y CAGR
8.5%
EPS TTM
1.58
EPS 5Y CAGR
-10.6%
Cash flow
How much cash the business throws off
Operating CF TTM
$133.84M
Free CF TTM
$48.43M
FCF margin
4.7%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
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