One-glance verdict
Undervalued
$11.17 our estimate vs market $4.04
Wall Street consensus: $6.33 (-43.3% lower than our fair-value estimate)
64% below our estimate, below the bear case
Fundamentals snapshot
Telos Corporation
TLS · NGM · Technology · Software - Infrastructure
Current price
$4.04
52-week range
$3.79 - $8.36
Market cap
$301.94M
Balance sheet
Healthy
-45.14x Concerning
Net cash $43.68M. 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 17.5% last year.
- Reward Free cash flow was positive in 7/10 years.
- Risk Return on equity was -14.9% last year — the company lost money on shareholders' equity.
What this company does
Telos Corporation
Telos Corporation is a cybersecurity company that primarily sells security software and identity verification services to the U.S. government. For example, it helps federal agencies manage cyber risks and provides identity services like the TSA PreCheck enrollment program. This heavy reliance on government clients means its financial success is closely tied to winning and renewing these large, long-term contracts.
How the company got here
Telos started in the early 1970s as a technology contractor, providing specialized software for U.S. military and space missions, including NASA's Voyager spacecraft. In the 1980s, it expanded into the personal computer market before shifting its focus to network and information security in the 1990s. A major turning point came in the 2000s with the creation of its Xacta software, which helps organizations manage cybersecurity risks. The company has a long history of serving the U.S. federal government and went public on the stock market in November 2020.
What it actually does
Telos provides advanced cybersecurity and technology solutions primarily for organizations that need very high levels of security, like the U.S. military, intelligence agencies, and other government bodies. Think of them as a digital security guard for complex organizations. Their products and services help protect computer systems from cyberattacks, verify people's identities for secure access, and ensure that sensitive communications and networks are kept safe. For example, Telos is one of the companies authorized to enroll travelers in the TSA PreCheck® program at airports.
Security Solutions
This is the company's largest and main growth business, making up the vast majority of its revenue. This segment sells software and services that manage an organization's security risks and compliance (the process of following rules and regulations). Its key products are Xacta, a platform that automates cybersecurity risk management, and Telos ID, which provides identity verification services like fingerprinting and background checks for programs such as TSA PreCheck®. Government agencies and highly regulated businesses pay Telos for these tools to protect their systems and confirm people are who they say they are.
Secure Networks
This is the company's original and smaller business, focused on providing hands-on services rather than just software. The Secure Networks team designs, builds, and defends complex computer networks for government and military clients who have critical missions. This includes everything from setting up secure Wi-Fi on a military base to managing and defending entire enterprise networks from cyber threats. This part of the business is more labor-intensive and has lower margins (the profit made on each dollar of sales) compared to the Security Solutions segment.
What management is betting on now
The company's leadership is focused on winning new contracts and growing its Security Solutions business, which is their most profitable area. A major priority is expanding their identity services, like the TSA PreCheck® enrollment program, which has been a significant growth driver. They are also investing in artificial intelligence for their Xacta platform to further automate the process of managing cybersecurity compliance for their customers. After a period where revenue (the total money earned from sales) declined as large projects ended, the strategy is centered on securing new business to rebuild and accelerate growth.
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 Q3
$-7.13M
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
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
Revenue
$23.78M
Net income
$-28.05M
Diluted EPS
-0.39
Operating cash flow
$-7.08M
Free cash flow
$-7.13M
Fetching…
Sources
Is it cheap or expensive?
Fair value $11.17 vs current price $4.04
Wall Street consensus is the average analyst price target: $6.33 (-43.3% lower than our fair-value estimate).
Our most-likely fair value is $11.17 a share — about 176.6% above today's price of $4.04, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Healthy
Net cash $43.7M - more cash than debt. Interest coverage -45.1x.
Net debt
$-43.68M
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 $6.97M 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 $528.37M Interest coverage -22.31x Neither company has much profit cushion over interest right now.
Total debt $421.56M Interest coverage -0.21x Neither company has much profit cushion over interest right now.
Total debt $6.58B 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 17.5% last year.
-
Free cash flow was positive in 7/10 years.
Risks
-
Return on equity was -14.9% 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
15.66x
P/B
3.23x
P/S
1.56x
EV/EBITDA
-2,207.31x
PEG ratio
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Profitability
How much profit each dollar creates
Gross margin
42.1%
Operating margin
0.6%
Net margin
-8.1%
ROE
-14.9%
ROA
-1.6%
Health
Liquidity and balance-sheet strength
Debt / equity
0.07x
Current ratio
2.38x
Quick ratio
1.69x
Total debt
$6.97M
Total cash
$50.65M
Growth
How the business has been compounding
Revenue TTM
$193.71M
Revenue 5Y CAGR
-9.2%
EPS TTM
-0.22
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$34.62M
Free CF TTM
$29.44M
FCF margin
15.2%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
—