Transcat Inc (NASDAQ: TRNS)

Sector: Industrials Industry: Specialty Business Services CIK: 0000099302
Market Cap 703.41 Mn
P/B 2.37
P/E 89.12
P/S 2.20
ROIC (Qtr) 2.81
Div Yield % 0.00
Rev 1y % (Qtr) 25.62
Total Debt (Qtr) 129.12 Mn
Debt/Equity (Qtr) 0.44
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About

Transcat Inc., a prominent company in the test and measurement industry, is publicly traded under the symbol TRNS. It operates primarily in the highly regulated sectors of life science, pharmaceutical, biotechnology, medical device, and other FDA-regulated businesses. Transcat's core business activities revolve around providing accredited calibration services, cost control and optimization services, and distribution and rental of professional-grade handheld test, measurement, and control instrumentation. The company's operations span across various...

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Investment thesis

Bull case

  • Operating cash flow of 39.28M provides exceptional 10.63x coverage of interest expenses 3.69M, showing strong debt service capability.
  • Robust free cash flow of 24.87M exceeds capital expenditure of 14.40M by 1.73x, indicating strong organic growth funding capability.
  • Robust tangible asset base of 173.42M provides 3.92x coverage of working capital 44.19M, indicating strong operational backing.
  • Tangible assets of 173.42M provide robust 9.06x coverage of other current liabilities 19.13M, indicating strong asset backing.
  • Operating cash flow of 39.28M provides solid 1.07x coverage of current liabilities 36.62M, showing strong operational health.

Bear case

  • Operating cash flow of 39.28M barely covers its investment activities of (98.27M), with a coverage ratio of -0.40, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 3.47M against inventory of 12.91M, the 0.27 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Cash reserves of 3.47M provide limited coverage of acquisition spending of (83.87M), which is -0.04x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • High receivables of 59.79M relative to inventory of 12.91M (4.63 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • Operating earnings of 15.11M show weak coverage of depreciation charges of 28.03M, with a 0.54 ratio indicating high capital intensity and potential reinvestment needs.

Segments Breakdown of Revenue (2025)

Product and Service Breakdown of Revenue (2025)

Peer comparison

Companies in the Specialty Business Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 CTAS Cintas Corp 120.08 Bn 556.91 33.85 3.24 Bn
2 RELX Relx Plc 56.19 Bn 20.01 4.34 9.82 Bn
3 TRI Thomson Reuters Corp /Can/ 37.42 Bn 24.91 5.00 2.44 Bn
4 CPRT Copart Inc 36.25 Bn 22.74 7.79 0.10 Bn
5 RBA Rb Global Inc. 19.20 Bn 49.09 4.24 4.21 Bn
6 ULS UL Solutions Inc. 14.12 Bn 43.32 4.92 0.74 Bn
7 GPN Global Payments Inc 11.52 Bn 284.78 8.66 16.20 Bn
8 ARMK Aramark 10.37 Bn 32.72 0.55 6.57 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.78 2.48
EV to Cash from Ops. EV/CFO 21.44 30.22
EV to Debt EV to Debt 6.52 31.08
EV to EBIT EV/EBIT 55.75 94.66
EV to EBITDA EV/EBITDA 19.18 18.37
EV to Free Cash Flow [EV/FCF] EV/FCF 33.86 -20.73
EV to Market Cap EV to Market Cap 1.20 178.66
EV to Revenue EV/Rev 2.63 8.12
Price to Book Value [P/B] P/B 2.37 5.37
Price to Earnings [P/E] P/E 89.12 65.19
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 -15,800.59
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 10.14
Dividend per Basic Share Div per Share (Qtr) 0.00 0.35
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 7.65
Interest Coverage Int. cover (Qtr) 4.09 30.46
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -6.04 -178.22
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -25.19 155.14
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 5.38
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -39.38 -34.92
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 12.38 -86.28
EBIT Growth (1y) % EBIT 1y % (Qtr) -31.50 -22.62
EBT Growth (1y) % EBT 1y % (Qtr) -47.35 -287.35
EPS Growth (1y) % EPS 1y % (Qtr) -55.96 -118.47
FCF Growth (1y) % FCF 1y % (Qtr) 21.33 -146.43
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 18.47 2.63
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.68 0.84
Cash Payout Ratio Cash Payout (Qtr) 0.00 -0.03
Cash Ratio Cash Ratio (Qtr) 0.09 1.15
Current Ratio Curr Ratio (Qtr) 2.21 4.12
Debt to Equity Ratio Debt/Equity (Qtr) 0.44 0.92
Interest Cover Ratio Int Coverage (Qtr) 4.09 30.46
Times Interest Earned Times Interest Earned (Qtr) 4.09 30.46
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 13.50 -33.89
EBIT Margin % EBIT Margin % (Qtr) 4.72 -43.32
EBT Margin % EBT Margin % (Qtr) 3.57 -44.88
Gross Margin % Gross Margin % (Qtr) 32.50 39.81
Net Profit Margin % Net Margin % (Qtr) 2.50 -41.60