One-glance verdict
Undervalued
$12.19 our estimate vs market $7.17
Wall Street consensus: $7.08 (-41.9% lower than our fair-value estimate)
41% below our estimate, below the bear case
Fundamentals snapshot
Telos Corporation
TLS · NGM · Technology · Software - Infrastructure
Current price
$7.17
52-week range
$3.79 - $8.30
Market cap
$535.86M
Balance sheet
Healthy
-45.14x Concerning
Net cash $45.38M. Interest coverage shows how many times profit covers the interest bill.
What stands out
2 Rewards
1 Risk
2 rewards · 1 risks
- Reward Revenue grew 19.8% last year.
- Reward Free cash flow was positive in 7/10 years.
- Risk Return on equity was -8.6% last year — the company lost money on shareholders' equity.
What this company does
Telos Corporation
Telos Corporation sells cybersecurity and identity verification solutions, mainly to the U.S. government and large businesses. Their software helps organizations manage risks and comply with security rules, which is important because cybersecurity threats are constantly growing. This means their income depends on keeping these important clients protected and their solutions up-to-date.
How the company got here
Telos Corporation has a long history, starting in 1968. It began by focusing on telecommunications and has evolved over the decades to become a significant player in cybersecurity and cloud solutions. A key turning point was its strategic shift towards providing advanced security solutions, particularly for government agencies and large enterprises, recognizing the growing need for robust digital protection in an increasingly connected world. This evolution has positioned Telos to address complex challenges in cyber risk management and secure network operations.
What it actually does
Telos Corporation offers a range of technology solutions focused on cybersecurity, cloud computing, and enterprise security. Think of them as a company that helps other organizations, especially government bodies and large businesses, protect their digital information and systems. They provide software and services that manage risks, ensure compliance with security rules, and secure communications and identities in a digital world. Their work is crucial for maintaining the integrity and safety of sensitive data and operations.
Security Solutions
This segment is all about protecting organizations from cyber threats and ensuring they follow security regulations. Telos offers a platform called Xacta, which automates the complex process of managing cyber risks and meeting compliance requirements for computer systems, whether they are in the cloud, on company servers, or a mix of both. They also provide consulting services to help clients understand and implement security best practices, conduct security assessments, and perform penetration testing (simulated cyberattacks to find weaknesses). This part of the business is vital for clients who handle sensitive data and must adhere to strict security standards.
Secure Networks
The Secure Networks segment focuses on ensuring that communication and network systems are both efficient and highly secure. This includes providing solutions for secure message handling, which is critical for organizations like the military that need reliable and protected ways to distribute information. They also offer services for managing and defending complex enterprise networks, helping businesses maintain their operational continuity and security even when employees are working remotely. This segment ensures that the underlying infrastructure for communication and data transfer is robust and protected from unauthorized access or disruption.
Telos Identity Solutions
This business line provides tools and services to verify and manage people's identities securely. It's like a digital passport control system for organizations. Telos offers solutions for secure identity verification, enrolling people into trusted identity systems, and managing digital credentials. They are involved in services like TSA PreCheck enrollment, where they help verify identities for travelers, and other biometric services that use unique physical characteristics like fingerprints for secure authentication. This is important for government agencies and regulated industries that need to ensure individuals are who they say they are.
What management is betting on now
Telos management is focused on expanding its reach in cybersecurity and cloud solutions, particularly by leveraging artificial intelligence within its existing platforms like Xacta. They are also investing in identity solutions, recognizing the growing importance of secure digital identification in various sectors. The company aims to grow by helping more government agencies and large commercial clients navigate complex security and compliance landscapes. By enhancing their automated risk management tools and secure identity offerings, Telos is positioning itself to capitalize on the increasing demand for robust digital security.
Price history
How the share price has moved
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Loading price history…
Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q4
$-12.39M
FY2025 Q1
$5.98M
FY2025 Q2
$6.82M
FY2025 Q3
$8.69M
FY2025 Q4
$7.95M
FY2026 Q1
$8.51M
FY2026 Q2
$8.59M
FY2026 Q3
$9.36M
Revenue
$55.20M
Net income
$4.44M
Diluted EPS
0.06
Operating cash flow
$9.44M
Free cash flow
$9.36M
Fetching…
Sources
Revenue
$47.74M
Net income
$660.00K
Diluted EPS
0.01
Operating cash flow
$8.83M
Free cash flow
$8.59M
Fetching…
Sources
Revenue
$47.74M
Net income
$2.02M
Diluted EPS
0.03
Operating cash flow
$8.66M
Free cash flow
$8.51M
Fetching…
Sources
Revenue
$46.78M
Net income
$-16.31M
Diluted EPS
-0.22
Operating cash flow
$7.98M
Free cash flow
$7.95M
Fetching…
Sources
Revenue
$51.44M
Net income
$-2.11M
Diluted EPS
-0.03
Operating cash flow
$9.15M
Free cash flow
$8.69M
Fetching…
Sources
Revenue
$35.97M
Net income
$-9.52M
Diluted EPS
-0.13
Operating cash flow
$6.95M
Free cash flow
$6.82M
Fetching…
Sources
Revenue
$30.62M
Net income
$-8.60M
Diluted EPS
-0.12
Operating cash flow
$6.11M
Free cash flow
$5.98M
Fetching…
Sources
Revenue
$26.37M
Net income
$-9.33M
Diluted EPS
-0.13
Operating cash flow
$-10.52M
Free cash flow
$-12.39M
Fetching…
Sources
Is it cheap or expensive?
Fair value $12.19 vs current price $7.17
Wall Street consensus is the average analyst price target: $7.08 (-41.9% lower than our fair-value estimate).
Our most-likely fair value is $12.19 a share — about 70.0% above today's price of $7.17, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Healthy
Net cash $45.4M - more cash than debt. Interest coverage -45.1x.
Net debt
$-45.38M
Interest coverage
-45.14x
Telos Corporation's profit covers its interest bill about 0.0 times over. which is weaker than most peers shown here and 2 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Healthy
Worse cushion
Baseline
Better cushion
TLS
BASELINE
Telos Corporation
Total debt $6.39M Interest coverage -45.14x This is the baseline the peer rows are being compared against.
Total debt $53.00M Interest coverage 38.25x This peer still has a real interest-payment cushion, while TLS does not.
Total debt $528.11M Interest coverage -22.31x Neither company has much profit cushion over interest right now.
Total debt $841.09M Interest coverage -0.21x Neither company has much profit cushion over interest right now.
Total debt $6.56B Interest coverage 10.34x This peer still has a real interest-payment cushion, while TLS does not.
What you should know
The case for and against TLS
2 Rewards
1 Risk
Rewards
-
Revenue grew 19.8% last year.
-
Free cash flow was positive in 7/10 years.
Risks
-
Return on equity was -8.6% last year — the company lost money on shareholders' equity.
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)
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Forward P/E
24.72x
P/B
5.58x
P/S
2.71x
EV/EBITDA
55.88x
PEG ratio
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Profitability
How much profit each dollar creates
Gross margin
41.6%
Operating margin
7.4%
Net margin
-4.7%
ROE
-8.6%
ROA
1.1%
Health
Liquidity and balance-sheet strength
Debt / equity
0.07x
Current ratio
2.49x
Quick ratio
1.94x
Total debt
$6.39M
Total cash
$51.76M
Growth
How the business has been compounding
Revenue TTM
$197.46M
Revenue 5Y CAGR
-9.2%
EPS TTM
-0.13
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$34.91M
Free CF TTM
$29.44M
FCF margin
14.9%
Dividend
Shareholder payout
Yield
0.0%
Payout ratio
0.0%
Last ex-div date
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