Mistras Group, Inc. (MG) | Investment Case

1. Company Snapshot

1.a. Company Description

Mistras Group, Inc.provides technology-enabled asset protection solutions worldwide.The company operates through three segments: Services, International, and Products and Systems.

It offers non-destructive testing services; predictive maintenance assessments of fixed and rotating assets; inline inspection for pipelines; and develops enterprise inspection database management software and plant condition management software.The company also provides maintenance and light mechanical services, such as corrosion removal, mitigation and prevention, insulation installation and removal, electrical, heat tracing, industrial cleaning, pipefitting, and welding; engineering consulting services primarily for process equipment, technologies, and facilities; and utilizes scaffolding and rope access to access at-height and confined assets.In addition, it offers certified divers for subsea inspection and maintenance; unmanned aerial, land-based, and subsea systems for inspection applications; online condition-monitoring solutions; quality assurance and quality control solutions for new and existing metal and alloy components, materials, and composites.

Further, the company designs and installs monitoring systems, as well as provides commissioning, training, reporting, technical support, and annual maintenance services; Web-based solutions; and custom-developed software.Additionally, it designs, manufactures, and sells acoustic emission sensors, instruments, and turnkey systems for monitoring and testing materials, pressure components, processes, and structures, as well as automated ultrasonic systems and scanners.The company serves oil and gas, commercial aerospace and defense, fossil and nuclear power, alternative and renewable energy, industrial, public infrastructure, petrochemical, transportation, and process industries, as well as research and engineering institutions.

Mistras Group, Inc.was founded in 1978 and is headquartered in Princeton Junction, New Jersey.

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1.b. Last Insights on MG

MISTRAS Group's recent performance was driven by strong Q3 2025 earnings, beating estimates with $0.46 per share versus $0.26 per share expected. Organic revenue growth was robust at 7.0%, with a 300 basis point expansion in gross profit margin. The company achieved record adjusted EBITDA of $30.2 million and net income of $13.1 million. Partnerships, such as with Villari for wireless crack-detection sensors and Batchelor & Kimball for data center inspection solutions, have expanded its offerings. A conference call to discuss Q3 results further boosted investor confidence.

1.c. Company Highlights

Last Price	11.53
Change Percentage	-2.37%
Open	11.88
Previous Close	11.81
Market Cap ( Millions)	364
Volume	117835
Year High	13.43
Year Low	7.06
M A 50	10.7
M A 200	9.34

FCF Yield	0.58%
Dividend Yield	0.00%
ROE	8.63%
Debt / Equity	103.06%
Net Debt / EBIDTA	296.33%
Price To Book	1.62
Price Earnings Ratio	20.33
Price To FCF	172.97
Price To sales	0.51
EV / EBITDA	8.18

2. MISTRAS Delivers Robust Q3 with Revenue Growth and Margin Expansion

MISTRAS reported a strong third quarter with revenue of $195.5 million, a 7% increase year-over-year, exceeding expectations. The company's PCMS offering within its data solutions business grew by nearly 25% in the quarter, driven by several implementation projects. Earnings per diluted share came in at $0.41, while adjusted EBITDA reached a record $30.2 million, resulting in a margin of 15.4%. Notably, the actual EPS was $0.46, significantly beating estimates of $0.29.

Publication Date: Nov -19

                                    📋 Highlights
                                    Revenue Growth::
                                                Q3 revenue reached $195.5 million, a 7% increase YoY, exceeding expectations.
PCMS Expansion::
                                                Data solutions (PCMS) grew 25% YoY, driven by implementation projects in oil & gas and power generation.
Market Vertical Outperformance::
                                                Aerospace & defense revenue rose 10.6% ($2.3M gain), industrials 15.8%, and infrastructure 21.1% YoY.
Gross Margin Expansion::
                                                Gross profit surged $9.3M (19% YoY) with margin widening 300 bps to 29.8%, aided by lab closures and operational efficiency.

                                

Segment Performance

The company's end markets delivered year-over-year revenue growth across its 5 largest industry verticals. The energy market, comprising oil & gas and power generation, led the way with an 8.1% growth. Aerospace & defense grew by 10.6%, driven by solid volume gains across the private space and defense industries. Industrials and infrastructure markets also reported growth, with industrials up 15.8% and infrastructure up 21.1%. As Natalia Shuman mentioned, "Demand for our services is continuously driven by mission-critical projects, aging assets, and aging infrastructure across a diverse set of demanding and dynamic industries."

Margin Expansion and Operational Efficiency

Gross profit increased by $9.3 million or 19% year-over-year, with gross margin expanding by 300 basis points to 29.8%. The improvement was attributed to favorable business mix, operational efficiencies, and the closure of unprofitable labs. Adjusted EBITDA margin increased to 15.4% from 12.7% in the prior year quarter, an expansion of 270 basis points. The company's proactive cost management and shift towards higher-margin business contributed to the significant improvement.

Valuation and Outlook

With a P/E Ratio of 20.89 and an EV/EBITDA of 8.33, the market appears to be pricing in a certain level of growth. Analysts estimate revenue growth at 2.7% for the next year. Given the company's strong Q3 performance and expanding margins, it remains to be seen whether MISTRAS can continue to deliver on its growth prospects. The company's guidance suggests moderate growth in EBITDA and revenue in the fourth quarter, which will be crucial in determining its full-year performance.

3. NewsRoom

MG or TER: Which Is the Better Value Stock Right Now?

Nov -26

Source: zacks.com

Magna International Inc. (MG:CA) Presents at Barclays 16th Annual Global Automotive and Mobility Tech Conference Transcript

Nov -20

Source: seekingalpha.com

Mistras: Vision 2030 Starts To Deliver

Nov -12

Source: seekingalpha.com

MG vs. TER: Which Stock Is the Better Value Option?

Nov -10

Source: zacks.com

Mistras Group, Inc. (MG) Q3 2025 Earnings Call Transcript

Nov -05

Source: seekingalpha.com

Mistras (MG) Beats Q3 Earnings and Revenue Estimates

Nov -05

Source: zacks.com

MISTRAS Announces Third Quarter 2025 Results

Nov -04

Source: globenewswire.com

Magna International Inc. (MG:CA) Q3 2025 Earnings Call Transcript

Oct -31

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.00%)

6. Segments

North America

Expected Growth: 3.0%

Mistras Group, Inc.'s 3.0% growth in North America is driven by increasing demand for non-destructive testing and inspection services in the aerospace, oil and gas, and power generation industries. Additionally, the region's growing infrastructure development and maintenance activities, as well as the adoption of advanced technologies such as robotics and artificial intelligence, contribute to the segment's growth.

International

Expected Growth: 3.0%

Mistras Group's International segment growth of 3.0% is driven by increasing demand for non-destructive testing and inspection services in emerging markets, expansion into new geographies, and strategic acquisitions. Additionally, growing infrastructure development and capital expenditures in industries such as aerospace, oil and gas, and power generation are contributing to the segment's growth.

Products and Systems

Expected Growth: 3.0%

Mistras Group's 3.0% growth in Products and Systems is driven by increasing demand for non-destructive testing (NDT) and inspection services, particularly in the aerospace, oil and gas, and power generation industries. Additionally, the company's expansion into new markets, such as the renewable energy sector, and its focus on innovative technologies, like acoustic emission testing, are contributing to its growth.

Corporate and Eliminations

Expected Growth: 3.0%

Mistras Group's Corporate and Eliminations segment growth of 3.0% is driven by increased investments in digital transformation, expansion of service offerings, and strategic acquisitions. Additionally, cost savings initiatives and operational efficiencies have contributed to the segment's growth. The company's focus on innovation and diversification has also enabled it to capitalize on emerging trends in the industry.

7. Detailed Products

Acoustic Emission (AE) Testing

A non-destructive testing technique that detects high-frequency acoustic signals emitted by materials under stress.

Automated Ultrasonic Testing (AUT)

A non-destructive testing technique that uses high-frequency sound waves to inspect materials and detect defects.

Digital Radiography (DR) Inspection

A non-destructive testing technique that uses digital X-rays to inspect the internal structure of materials and detect defects.

Eddy Current Testing (ET)

A non-destructive testing technique that uses electromagnetic induction to inspect the surface and subsurface of conductive materials.

Infrared Thermography (IRT) Inspection

A non-destructive testing technique that uses thermal imaging to detect temperature anomalies and defects in materials.

Magnetic Flux Leakage (MFL) Inspection

A non-destructive testing technique that uses magnetic fields to detect defects in ferromagnetic materials.

Phased Array Ultrasonic Testing (PAUT)

A non-destructive testing technique that uses advanced ultrasonic technology to inspect complex components.

Radiographic Testing (RT)

A non-destructive testing technique that uses X-rays or gamma rays to inspect the internal structure of materials.

Time-of-Flight Diffraction (TOFD) Inspection

A non-destructive testing technique that uses ultrasonic technology to inspect welds and detect defects.

Ultrasonic Testing (UT) Inspection

A non-destructive testing technique that uses high-frequency sound waves to inspect materials and detect defects.

8. Mistras Group, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Mistras Group, Inc. operates in a niche market, providing technology-enabled asset protection solutions. While there are some substitutes available, they are not as comprehensive as Mistras' offerings, reducing the threat of substitutes.

Bargaining Power Of Customers

Mistras Group, Inc. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's specialized services and technology make it difficult for customers to switch to alternative providers.

Bargaining Power Of Suppliers

Mistras Group, Inc. relies on a few key suppliers for its equipment and technology. While the company has some bargaining power due to its size, suppliers still have some leverage, particularly in the case of specialized equipment.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the non-destructive testing and inspection industry. New entrants would need to invest heavily in technology, equipment, and training, making it difficult to enter the market.

Intensity Of Rivalry

The non-destructive testing and inspection industry is highly competitive, with several established players competing for market share. Mistras Group, Inc. must continually innovate and improve its services to maintain its market position.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	52.02%
Debt Cost	7.30%
Equity Weight	47.98%
Equity Cost	12.25%
WACC	9.68%
Leverage	108.44%

11. Quality Control: Mistras Group, Inc. passed 1 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Napco Security Technologies

A-Score: 5.0/10

Value: 1.2

Growth: 8.8

Quality: 8.6

Yield: 1.0

Momentum: 6.0

Volatility: 4.7

1-Year Total Return ->

Arlo Technologies

A-Score: 4.3/10

Value: 4.9

Growth: 5.7

Quality: 3.7

Yield: 0.0

Momentum: 8.5

Volatility: 3.3

1-Year Total Return ->

Evolv Technologies Holdings

A-Score: 4.2/10

Value: 6.0

Growth: 4.7

Quality: 3.6

Yield: 0.0

Momentum: 9.5

Volatility: 1.7

1-Year Total Return ->

Mistras

A-Score: 4.2/10

Value: 6.8

Growth: 4.3

Quality: 5.5

Yield: 0.0

Momentum: 3.5

Volatility: 5.3

1-Year Total Return ->

Bridger Aerospace

A-Score: 3.7/10

Value: 7.8

Growth: 6.4

Quality: 4.8

Yield: 0.0

Momentum: 2.0

Volatility: 1.0

1-Year Total Return ->

VerifyMe

A-Score: 2.9/10

Value: 7.4

Growth: 6.4

Quality: 3.2

Yield: 0.0

Momentum: 0.5

Volatility: 0.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

13.34%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

9.68%

Mistras Group, Inc. - US60649T1079

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on MG

1.c. Company Highlights

Lower Quality

Lower Growth

Cheaper

Earnings Beats

Revenues Beats

Strong Momentum

Earnings Miss

Revenues Miss

Average Growth

Average Quality

Average Yield

Stable Momentum

Fairly Valued

Weak Momentum

2. MISTRAS Delivers Robust Q3 with Revenue Growth and Margin Expansion

Segment Performance

Margin Expansion and Operational Efficiency

Valuation and Outlook

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.00%)

6. Segments

North America

Expected Growth: 3.0%

International

Expected Growth: 3.0%

Products and Systems

Expected Growth: 3.0%

Corporate and Eliminations

Expected Growth: 3.0%

7. Detailed Products

Acoustic Emission (AE) Testing

Automated Ultrasonic Testing (AUT)

Digital Radiography (DR) Inspection

Eddy Current Testing (ET)

Infrared Thermography (IRT) Inspection

Magnetic Flux Leakage (MFL) Inspection

Phased Array Ultrasonic Testing (PAUT)

Radiographic Testing (RT)

Time-of-Flight Diffraction (TOFD) Inspection

Ultrasonic Testing (UT) Inspection

8. Mistras Group, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Mistras Group, Inc. passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

11.53$

Current Price

12.e Scoring ^Insights

12.f DCF ^BETA