Download PDF

1. Company Snapshot

1.a. Company Description

OSI Systems, Inc.designs and manufactures electronic systems and components worldwide.It operates in three segments: Security, Healthcare, and Optoelectronics and Manufacturing.


The Security segment offers baggage and parcel inspection, cargo and vehicle inspection, hold baggage and people screening, radiation detection, and explosive and narcotics trace detection systems under the Rapiscan Systems, AS&E, and Gatekeeper names.It also provides site design, installation, training, and technical support services; and security screening solutions under the S2 name.The Healthcare segment offers patient monitoring and diagnostic cardiology systems, and related supplies and accessories under the Spacelabs name for use in critical care, emergency, and perioperative areas within hospitals, physicians' offices, medical clinics, and ambulatory surgery centers.


The Optoelectronics and Manufacturing segment provides optoelectronic devices under the OSI Optoelectronics, OSI LaserDiode, OSI Laserscan, Semicoa, and Advanced Photonix names for the aerospace and defense, avionics, medical imaging and diagnostics, biochemistry analysis, pharmaceutical, nanotechnology, telecommunications, construction, and homeland security markets.It also offers electronics manufacturing services to original equipment manufacturers and end users for medical, automotive, defense, aerospace, industrial, and consumer applications under the OSI Electronics, APlus Products, Altaflex, and PFC names; and LCD displays for medical, industrial, and consumer electronics applications, as well as flex circuits for OEM customers.This segment offers laser-based remote sensing devices to detect and classify vehicles in toll and traffic management systems under the OSI Laserscan and Autosense names; and solid-state laser products for aerospace, defense, telecommunication, and medical applications under the OSI LaserDiode name.


The company was incorporated in 1987 and is headquartered in Hawthorne, California.

Show Full description

1.b. Last Insights on OSIS

OSI Systems' recent performance was positively driven by its Q1 2026 earnings beat, with revenue and EPS surpassing estimates. The company's record first-quarter revenues and non-GAAP earnings per share were fueled by growth across its divisions. A $20 million order for radiation monitoring solutions also contributed to its momentum. Additionally, institutional investors, including Envestnet Asset Management Inc. and Commonwealth of Pennsylvania Public School Empls Retrmt SYS, have increased their stakes in the company.

1.c. Company Highlights

2. OSI Systems' Q1 Fiscal 2026 Earnings: A Strong Start to the Year

OSI Systems, Inc. reported a robust first quarter for fiscal 2026, with revenues increasing 12% year-over-year to a record $385 million. The company's non-GAAP adjusted EPS reached $1.42, surpassing estimates of $1.37. The strong top-line growth was driven by double-digit increases across all three divisions, with the Security division leading the way at 13% growth. Excluding contributions from Mexico contracts and revenues from businesses acquired in fiscal 2025, underlying consolidated revenues grew roughly 26% in Q1. The company's gross margin was 32% in Q1, with operating expenses decreasing due to more favorable foreign exchange rates.

Publication Date: Nov -02

📋 Highlights
  • Record Revenue Growth:: Q1 revenue hit $385 million (+12% YoY), with underlying growth of ~26% excluding Mexico contracts and acquisitions.
  • Security Division Outperforms:: Generated $254 million (+13% growth), led by $75 million in inspection orders and $60 million in RF product wins.
  • Service Revenues Surge:: Rose 23% YoY, driven by recurring revenue, with expectations of faster growth than overall revenues.
  • Margin and Profitability:: Gross margin at 32%, R&D investment reached $20 million, and Q1 backlog of $1.9 billion supports future visibility.
  • Guidance Raised:: Fiscal 2026 revenue growth forecasted at 6.5–9%, with non-GAAP EPS guidance of 9–12% growth despite reduced Mexico contract revenue.

Segment Performance

The Security division saw revenues of $254 million, with bookings remaining robust and a record Q1 backlog. The division achieved double-digit growth in aviation, cargo, and RF detection offerings, including service. Notable wins included $75 million in non-intrusive inspection product and integration orders and over $60 million in RF product orders. The Optoelectronics and Manufacturing division delivered record Q1 revenues, with strong profitability, while the Healthcare division saw sales rise 10% year-over-year, driven by the execution of improvement plans.

Guidance and Outlook

The company raised its fiscal 2026 guidance for both revenues and adjusted earnings per share, anticipating year-over-year revenue growth of 6.5% to 9.0% and non-GAAP adjusted earnings per diluted share growth of 9% to 12%. The updated outlook factors in a reduction of revenues from Mexico contracts in the Security division. The company expects faster growth in recurring service revenue than overall revenue growth, with product revenues also expected to be strong.

Valuation and Growth Prospects

With a P/E Ratio of 30.9 and an EV/EBITDA of 18.77, the market appears to have priced in a significant amount of growth. Analysts estimate next year's revenue growth at 7.1%, which is slightly below the company's current guidance. The company's ROIC of 15.6% and ROE of 16.91% indicate a strong ability to generate returns on invested capital. As the company continues to invest in innovation and expand its capabilities through M&A, investors will be watching to see if the company can deliver on its growth prospects.

3. NewsRoom

Card image cap

Cetera Investment Advisers Sells 766 Shares of OSI Systems, Inc. $OSIS

Nov -29

Source: defenseworld.net

Card image cap

OSI Systems Receives $20 Million Order to Provide Radiation Monitoring Solutions

Nov -24

Source: businesswire.com

Card image cap

OSI Systems, Inc. $OSIS Shares Purchased by Commonwealth of Pennsylvania Public School Empls Retrmt SYS

Nov -24

Source: defenseworld.net

Card image cap

OSI Systems to Participate in the Roth Technology Conference

Nov -18

Source: businesswire.com

Card image cap

OSI Systems, Inc. Prices Upsized $500 Million Convertible Senior Notes Offering

Nov -18

Source: businesswire.com

Card image cap

OSI Systems, Inc. Announces Proposed Convertible Senior Notes Offering

Nov -17

Source: businesswire.com

Card image cap

Envestnet Asset Management Inc. Grows Holdings in OSI Systems, Inc. $OSIS

Nov -05

Source: defenseworld.net

Card image cap

State of New Jersey Common Pension Fund D Trims Position in OSI Systems, Inc. $OSIS

Nov -02

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.68%)

6. Segments

Security

Expected Growth: 10.5%

OSI Systems' 10.5% growth is driven by increasing demand for security screening products, expansion in emerging markets, and strategic acquisitions. The company's focus on innovation, particularly in AI-powered security solutions, has also contributed to its growth. Additionally, the rising need for border security and surveillance systems has boosted demand for OSI's products, further fueling its growth.

Optoelectronics and Manufacturing

Expected Growth: 11.5%

OSI Systems' Optoelectronics and Manufacturing segment's 11.5% growth is driven by increasing demand for optoelectronic devices in security and defense applications, growing adoption of 3D scanning and sensing technologies, and expansion in the automotive and industrial markets. Additionally, the company's strategic acquisitions and investments in research and development have contributed to its growth momentum.

Healthcare

Expected Growth: 10.0%

OSI Systems, Inc.'s Healthcare segment growth of 10.0% is driven by increasing demand for medical imaging and patient monitoring systems, expansion into emerging markets, and strategic partnerships with healthcare providers. Additionally, the company's focus on innovative product development, such as AI-powered diagnostic tools, is expected to contribute to future growth.

7. Detailed Products

Security Screening Systems

OSI Systems' security screening systems are designed to detect and prevent threats in various settings, including airports, government facilities, and public venues.

Turnkey Screening Solutions

Customized screening solutions for high-security facilities, including correctional facilities, courthouses, and government buildings.

Rapiscan Systems

Rapiscan Systems provides security screening products, including X-ray scanners, metal detectors, and explosive trace detection systems.

AS&E Inspection Systems

AS&E Inspection Systems offers non-intrusive inspection systems for cargo, vehicles, and people.

Optical Inspection Systems

Optical inspection systems for wafer and panel inspection in the semiconductor industry.

Medical Imaging Systems

Medical imaging systems for diagnostic and therapeutic applications.

Patient Monitoring Systems

Patient monitoring systems for vital sign monitoring and data analytics.

8. OSI Systems, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

OSI Systems, Inc. operates in a niche market with limited substitutes, but the threat of substitutes is still present due to the evolving technology and changing customer preferences.

Bargaining Power Of Customers

OSI Systems, Inc. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's products are often customized, making it difficult for customers to switch to alternative suppliers.

Bargaining Power Of Suppliers

OSI Systems, Inc. relies on a few key suppliers for critical components, which gives them some bargaining power. However, the company's large scale of operations and diversified supply chain mitigate this risk.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the security and healthcare industries, which require significant investments in research and development, manufacturing, and regulatory compliance.

Intensity Of Rivalry

The security and healthcare industries are highly competitive, with several established players competing for market share. OSI Systems, Inc. faces intense rivalry from companies like Smiths Group and Analogic Corporation.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 33.12%
Debt Cost 7.00%
Equity Weight 66.88%
Equity Cost 8.89%
WACC 8.26%
Leverage 49.52%

11. Quality Control: OSI Systems, Inc. passed 4 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

Stock-Card
Teledyne Technologies

A-Score: 5.7/10

Value: 2.8

Growth: 6.3

Quality: 6.9

Yield: 0.0

Momentum: 8.0

Volatility: 10.0

1-Year Total Return ->

View Full Report
Stock-Card
Vontier

A-Score: 5.0/10

Value: 4.9

Growth: 3.8

Quality: 6.3

Yield: 0.0

Momentum: 7.5

Volatility: 7.3

1-Year Total Return ->

View Full Report
Stock-Card
Jabil

A-Score: 4.9/10

Value: 3.5

Growth: 6.7

Quality: 4.6

Yield: 0.0

Momentum: 9.5

Volatility: 5.3

1-Year Total Return ->

View Full Report
Stock-Card
OSI Systems

A-Score: 4.8/10

Value: 2.6

Growth: 5.9

Quality: 6.1

Yield: 0.0

Momentum: 9.0

Volatility: 5.3

1-Year Total Return ->

View Full Report
Stock-Card
Badger Meter

A-Score: 4.5/10

Value: 1.4

Growth: 8.0

Quality: 7.6

Yield: 1.0

Momentum: 2.0

Volatility: 6.7

1-Year Total Return ->

View Full Report
Stock-Card
Plexus

A-Score: 4.4/10

Value: 3.6

Growth: 4.7

Quality: 5.6

Yield: 0.0

Momentum: 6.0

Volatility: 6.3

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

266.0$

Current Price

266$

Potential

-0.00%

Expected Cash-Flows