Tat Technologies Ltd (NASDAQ: TATT)

Sector: Industrials Industry: Aerospace & Defense CIK: 0000808439
Market Cap 586.12 Mn
P/B 3.43
P/E 37.40
P/S 3.40
ROIC (Qtr) 8.31
Div Yield % 0.00
Rev 1y % (Qtr) 14.28
Total Debt (Qtr) 17.46 Mn
Debt/Equity (Qtr) 0.10

About

TAT Technologies Ltd., or TAT, is a prominent player in the commercial and military aerospace and ground defense industries, with a strong presence in the design, development, and manufacture of heat transfer solutions, as well as MRO (Maintenance, Repair, and Overhaul) services. The company's operations are divided into four business units: OEM (Original Equipment Manufacturer) of heat transfer solutions and aviation accessories, MRO services for heat transfer components and OEM of heat transfer solutions, MRO services for aviation components,...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 8.45M provides robust 0.48x coverage of total debt 17.46M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 47.09M provide 13.42x coverage of short-term debt 3.51M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 222.61M provides 12.75x coverage of total debt 17.46M, indicating robust asset backing and low credit risk.
  • Tangible assets of 222.61M provide robust 13.32x coverage of other current liabilities 16.71M, indicating strong asset backing.
  • Retained earnings of 36.53M provide full 2.62x coverage of long-term debt 13.95M, indicating strong internal capital position.

Bear case

  • Operating cash flow of 8.45M barely covers its investment activities of (10.48M), with a coverage ratio of -0.81, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (10.48M) provide weak support for R&D spending of 1.19M, which is -8.81x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Free cash flow of (2.03M) provides weak coverage of capital expenditures of 10.48M, with a -0.19 ratio suggesting additional external financing needs for growth initiatives.
  • High depreciation of 4.90M relative to operating cash flow of 8.45M, which is 0.58x suggests significant maintenance capital requirements affecting free cash flow.
  • R&D investment of 1.19M represents just 0.05x of SG&A expenses of 22.69M, indicating potential underinvestment in innovation relative to administrative overhead.

Geographical Breakdown of Revenue (2024)

Geographical Breakdown of Revenue (2024)

Peer comparison

Companies in the Aerospace & Defense
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 GE General Electric Co 342.94 Bn 42.54 7.80 20.84 Bn
2 RTX RTX Corp 252.05 Bn 38.24 2.93 40.71 Bn
3 BA Boeing Co 174.43 Bn -17.16 2.16 53.35 Bn
4 LMT Lockheed Martin Corp 126.61 Bn 30.15 1.73 22.19 Bn
5 GD General Dynamics Corp 95.62 Bn 22.69 1.86 8.01 Bn
6 NOC Northrop Grumman Corp /De/ 89.30 Bn 22.22 2.18 16.96 Bn
7 HWM Howmet Aerospace Inc. 88.16 Bn 60.80 11.05 3.19 Bn
8 TDG TransDigm Group INC 80.97 Bn 43.39 9.17 30.02 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.49 3.58
EV to Cash from Ops. EV/CFO 66.16 58.38
EV to Debt EV to Debt 32.01 98.04
EV to EBIT EV/EBIT 29.88 19.42
EV to EBITDA EV/EBITDA 24.43 33.60
EV to Free Cash Flow [EV/FCF] EV/FCF -275.19 91.66
EV to Market Cap EV to Market Cap 0.95 1.13
EV to Revenue EV/Rev 3.24 11.27
Price to Book Value [P/B] P/B 3.43 4.81
Price to Earnings [P/E] P/E 37.40 31.79
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.00 -3.75
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 22.95
Dividend per Basic Share Div per Share (Qtr) 0.00 0.70
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 14.15
Interest Coverage Int. cover (Qtr) 16.64 -18.00
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -142.01 -50.32
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 449.52 1,609.43
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 0.75
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 76.45 -30.98
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 41.09 10.65
EBIT Growth (1y) % EBIT 1y % (Qtr) 76.71 -26.90
EBT Growth (1y) % EBT 1y % (Qtr) 96.65 -27.25
EPS Growth (1y) % EPS 1y % (Qtr) 77.92 -99.21
FCF Growth (1y) % FCF 1y % (Qtr) 72.65 6.61
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 37.26 -5.55
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.77 0.51
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.07
Cash Ratio Cash Ratio (Qtr) 1.27 1.76
Current Ratio Curr Ratio (Qtr) 4.44 3.72
Debt to Equity Ratio Debt/Equity (Qtr) 0.10 0.07
Interest Cover Ratio Int Coverage (Qtr) 16.64 -18.00
Times Interest Earned Times Interest Earned (Qtr) 16.64 -18.00
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 13.70 -345.84
EBIT Margin % EBIT Margin % (Qtr) 10.84 -382.63
EBT Margin % EBT Margin % (Qtr) 10.19 -387.93
Gross Margin % Gross Margin % (Qtr) 24.30 -33.31
Net Profit Margin % Net Margin % (Qtr) 9.10 -389.13