Servotronics, Inc. (SVT) | Investment Case

1. Company Snapshot

1.a. Company Description

Servotronics, Inc.designs, manufactures, and markets control components and consumer products in the United States and internationally.It operates in two segments, Advanced Technology Group (ATG) and Consumer Products Group (CPG).

The ATG segment provides servo-control components to the commercial aerospace, aircraft, and government related industries; and medical and industrial markets.This segment's principal components include torque motors, electromagnetic actuators, hydraulic and pneumatic valves, and related devices that convert an electrical current into a mechanical force or movement, and other products.It also offers metallic seals of various cross-sectional configurations to close tolerances from standard and special alloy steels.

This segment markets and sells its products to the United States Government, government prime contractors, government subcontractors, commercial manufacturers, and end-users.The CPG segment provides cutlery products, including steak, carving, bread, butcher, and paring knives for household use, as well as for use in restaurants, institutions, and the private industry; fixed and folding knives for hunting, fishing, and camping; and machetes, bayonets, axes, strap cutters, and other tools primarily for military and rescue/first-responder use, as well as for commercial markets.It also offers various specialty tools, putty knives, linoleum sheet cutters, field knives, scalpels, and micro-spatulas; and plastic and metal fabrication, as well as engineering, design, and OEM/white-label manufacturing services to customers in the consumer and commercial industries.

This segment markets its products through its sales resources and independent manufacturers' representatives to big box, hardware, supermarket, variety, department, discount, gift, drug, outdoor, and sporting stores, as well as through electronic commerce.The company was incorporated in 1959 and is headquartered in Elma, New York.

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1.b. Last Insights on SVT

Servotronics, Inc.'s recent performance was negatively driven by higher overhead costs and a less favorable product mix, as evident from its Q3 earnings decline year-over-year. The company's Q3 earnings were affected by these factors, despite a 7.3% increase in revenues. Additionally, the recent controversy surrounding Severn Trent PLC, Servotronics' parent company, has raised concerns about the company's accounting practices and potential misrepresentation of its financials. The BBC Panorama investigation accused Severn Trent of artificially inflating its balance sheet by £1.68 billion, which may have a negative impact on Servotronics' financials and reputation.

1.c. Company Highlights

Last Price	46.94
Change Percentage	0.00%
Open	47.48
Previous Close	46.94
Market Cap ( Millions)	120
Volume	55283
Year High	47.48
Year Low	9.67
M A 50	31.08
M A 200	16.1

FCF Yield	-1.31%
Dividend Yield	0.00%
ROE	-4.61%
Debt / Equity	15.72%
Net Debt / EBIDTA	35.56%
Price To Book	5.03
Price Earnings Ratio	-107.12
Price To FCF	-76.05
Price To sales	2.6
EV / EBITDA	11.93

2. Transcript Summary

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3. NewsRoom

VirTra Demonstrates Next-Generation Soldier Virtual Training (SVT) System for U.S. Army's PEO STRI

Oct -23

Source: globenewswire.com

TransDigm and Servotronics Announce Successful Completion of Tender Offer and TransDigm's Acquisition of Servotronics

Jul -01

Source: prnewswire.com

SERVOTRONICS INVESTOR ALERT by the Former Attorney General of Louisiana: Kahn Swick & Foti, LLC Investigates Adequacy of Price and Process in Proposed Sale of Servotronics, Inc. - SVT

May -21

Source: businesswire.com

SVT Stock Alert: Halper Sadeh LLC Is Investigating Whether the Sale of Servotronics, Inc. Is Fair to Shareholders

May -19

Source: businesswire.com

Shareholder Alert: The Ademi Firm investigates whether Servotronics, Inc. is obtaining a Fair Price for its Public Shareholders

May -19

Source: businesswire.com

TransDigm Group and Servotronics, Inc. Announce Acquisition Agreement

May -19

Source: prnewswire.com

Servotronics Swings to Earnings in Q1 on 12% Y/Y Revenue Growth

May -14

Source: zacks.com

Beaver Hollow Wellness Files Definitive Proxy Statement

May -02

Source: prnewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.50%)

6. Segments

Servo-control Components and Other Advanced Technology Products

Expected Growth: 8.5%

Growing demand for industrial automation and robotics, increasing adoption of Industry 4.0 technologies, and rising need for precision and efficiency in manufacturing processes drive the growth of servo-control components and technology products.

7. Detailed Products

Servotek Products

Servotek Products are a range of advanced motion control components, including servo motors, drives, and controls.

Custom Electronics

Custom Electronics are designed and manufactured to meet specific customer requirements, including circuit boards, wiring harnesses, and electromechanical assemblies.

Motion Control Components

Motion Control Components include servo motors, stepper motors, and drives, as well as gearboxes, encoders, and other accessories.

Electromechanical Assemblies

Electromechanical Assemblies are custom-designed and manufactured to meet specific customer requirements, including wiring harnesses, circuit boards, and mechanical assemblies.

8. Servotronics, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Servotronics, Inc. operates in a niche market with limited substitutes, but the threat of substitutes is still present due to the evolving nature of the industry.

Bargaining Power Of Customers

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

Bargaining Power Of Suppliers

Servotronics, Inc. relies on a few key suppliers for critical components, which gives them some bargaining power, but the company's long-term relationships with suppliers help mitigate this risk.

Threat Of New Entrants

The barriers to entry in Servotronics, Inc.'s industry are relatively high due to the need for specialized expertise and equipment, making it difficult for new entrants to compete effectively.

Intensity Of Rivalry

The industry in which Servotronics, Inc. operates is highly competitive, with several established players competing for market share, which increases the intensity of rivalry.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	7.91%
Debt Cost	7.01%
Equity Weight	92.09%
Equity Cost	7.01%
WACC	7.01%
Leverage	8.59%

11. Quality Control: Servotronics, Inc. passed 3 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

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

Pioneer Power Solutions

A-Score: 5.4/10

Value: 8.0

Growth: 4.2

Quality: 6.9

Yield: 10.0

Momentum: 2.0

Volatility: 1.0

1-Year Total Return ->

Flux Power

A-Score: 4.7/10

Value: 8.0

Growth: 6.9

Quality: 5.5

Yield: 0.0

Momentum: 7.5

Volatility: 0.3

1-Year Total Return ->

Ocean Power Technologies

A-Score: 4.2/10

Value: 6.0

Growth: 5.2

Quality: 3.6

Yield: 0.0

Momentum: 10.0

Volatility: 0.3

1-Year Total Return ->

Ultralife

A-Score: 4.1/10

Value: 6.5

Growth: 8.0

Quality: 5.4

Yield: 0.0

Momentum: 2.0

Volatility: 2.7

1-Year Total Return ->

Servotronics

A-Score: 4.1/10

Value: 6.2

Growth: 3.0

Quality: 5.2

Yield: 0.0

Momentum: 10.0

Volatility: 0.0

1-Year Total Return ->

RF Industries

A-Score: 3.9/10

Value: 4.7

Growth: 3.7

Quality: 3.1

Yield: 0.0

Momentum: 10.0

Volatility: 2.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

53.62%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

7.01%

Servotronics, Inc. - US8177321002

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on SVT

1.c. Company Highlights

Lower Growth

Cheaper

Medium Volatility

Average Yield

Stable Momentum

Fairly Valued

Weak Momentum

Average Quality

More Volatile

Strong Momentum

2. Transcript Summary

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.50%)

6. Segments

Servo-control Components and Other Advanced Technology Products

Expected Growth: 8.5%

7. Detailed Products

Servotek Products

Custom Electronics

Motion Control Components

Electromechanical Assemblies

8. Servotronics, 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: Servotronics, Inc. passed 3 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

46.94$

Current Price

46.94$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA