Richardson Electronics
A manufacturer misclassified as a distributor — the mix converted into margin in one print, and at $20.00 the market still prices it near the FY2023 peak.
We raised fair value on Richardson to $23.75 from $21.00 on October 7, 2026 and maintained our Buy. Our July note closed on a single question — whether the manufactured mix would convert into margin — and Q1 FY27 answered it. Sales grew 18.9% to $64.9M with all three units up, gross margin reached 34.6% (roughly 32.9% excluding a 1.7-point IEEPA tariff refund) against 31.0%, and backlog hit $184.4M, up 36.9% Y/Y on a 1.31x book-to-bill. We now model gross margin on a declining expansion curve to 34.9% by FY2031, operating expenses flexing at 0.50x revenue growth, and FY2027 revenue of $262.6M (+14.9%). FY2031 EBITDA rises to $48.6M; the 10.0x exit multiple and 10.3% cost of capital are unchanged.
RELL Price Target Raise | Buy, Fair Value $23.75
Fair value to $23.75 from $21.00, Buy maintained. Q1 FY27 gross margin of 34.6% answered whether the mix converts; margin forecast restructured to a declining curve reaching 34.9% by FY2031.
Open BriefingUpgrade to Buy from Hold, fair value to $21.00 from $17.00. Q4 FY26 delivered the first clean operating leverage in years; backlog at a three-year high and the market pricing the mix shift at nothing.
Post-print read on fourth-quarter FY26 results — inventory conversion, PMT backlog, and gross-margin trajectory against our $17 fair value.
Initiate at Hold, fair value $17. Manufactured mix, semiconductor-consumables recovery, and the working-capital story behind a misclassified business.
Research is provided for informational purposes only and does not constitute investment advice. Veltha is not a registered investment advisor. Past performance is not indicative of future results.