Transcat, Inc. (TRNS) | Investment Case

1. Company Snapshot

1.a. Company Description

Transcat, Inc.provides calibration and laboratory instrument services in the United States, Canada, and internationally.It operates through two segments, Service and Distribution.

The Service segment offers calibration, repair, inspection, analytical qualification, preventative maintenance, consulting, and other related services.This segment also provides CalTrak, a proprietary document and asset management software that is used to integrate and manage the workflow of its calibration service centers and customers' assets; and Compliance, Control and Cost, an online customer portal that provides its customers with web-based asset management capability, as well as a safe and secure off-site archive of calibration and other service records.The Distribution segment sells and rents test, measurement, and control instruments for customers' test and measurement instrumentation needs, as well as value added services, such as calibration/certification of equipment purchase, equipment rental, used equipment for sale, and equipment kitting.

This segment markets and sells its products through website, digital and print advertising, proactive outbound sales, and an inbound call center.The company provides services and products to highly regulated industries, principally life science, which includes companies in the pharmaceutical, biotechnology, medical device, and other FDA-regulated industries; and additional industries, including aerospace and defense industrial manufacturing, energy and utilities, and other industries that require accuracy in processes and confirmation of the capabilities of their equipment.Transcat, Inc.

was incorporated in 1964 and is headquartered in Rochester, New York.

Show Full description

1.b. Last Insights on TRNS

Transcat, Inc.'s recent performance was negatively impacted by a miss on Q3 earnings and revenue estimates. The company reported quarterly earnings of $0.45 per share, falling short of the Zacks Consensus Estimate of $0.53 per share. This underperformance is a departure from the year-ago earnings of $0.38 per share. Furthermore, the company's revenue failed to meet expectations, indicating a slowdown in sales. The lack of growth in revenue and earnings is a concerning trend for the company.

1.c. Company Highlights

Last Price	54.92
Change Percentage	2.67%
Open	53.66
Previous Close	53.49
Market Cap ( Millions)	512
Volume	83209
Year High	111.45
Year Low	52.06
M A 50	65.05
M A 200	76.39

FCF Yield	4.91%
Dividend Yield	0.00%
ROE	3.93%
Debt / Equity	48.67%
Net Debt / EBIDTA	487.99%
Price To Book	1.73
Price Earnings Ratio	45.09
Price To FCF	20.37
Price To sales	1.69
EV / EBITDA	22.9

2. Transcat's Q2 FY2026 Earnings: Strong Performance Driven by Diversified Portfolio

Transcat reported a robust financial performance in Q2 FY2026, with consolidated revenue increasing 21% to $82.3 million, driven by stable calibration revenue, strong performances from recent acquisitions, and significant growth in the rental channel. Consolidated gross profit grew 26%, and gross margins expanded 120 basis points. Adjusted EBITDA grew 37% with 160 basis points of margin expansion. Earnings per share (EPS) came in at $0.44, slightly below estimates of $0.46.

Publication Date: Nov -23

                                    📋 Highlights
                                    Revenue Growth::
                                                Q2 revenue surged 21% to $83 million, driven by stable calibration, acquisitions, and rental channel growth.
Profit Margins::
                                                Gross profit rose 26% ($26.8 million) with 120 bps margin expansion; adjusted EBITDA grew 37% with 160 bps margin expansion.
Rental Business Performance::
                                                Distribution revenue hit $29.4 million (+24%) due to high-margin rental growth and Axiom Test Equipment integration.
Acquisition Success::
                                                Essco and Martin integrations are progressing smoothly, contributing to 20% service revenue growth and strong regional expansion.
Service Segment Outlook::
                                                Expected return to high single-digit organic service growth in H2 2026, despite customer delays and a softer economic cycle.

                                

Segment Performance

The service segment delivered 20% revenue growth, despite continued economic volatility. Distribution revenue grew 24%, primarily due to the strong performance of the higher-margin rental business. The integration of Axiom Test Equipment and the rent versus buy impact, given macroeconomic challenges, drove the growth in rentals. The company expects to continue seeing good performance in the rental business, with margin expansion likely in the 250 to 300 basis points range.

Outlook and Growth Prospects

Transcat expects to return to high single-digit organic service growth in the second half of FY2026, driven by consistent delays for customers who originally expressed interest in switching to Transcat. The company's strong acquisition pipeline is expected to support an increase in geographic footprint, capabilities, and overall market share. The leadership team continues to strengthen, contributing to the ability to deliver sustainable long-term value for shareholders.

Valuation and Growth Expectations

With a P/E Ratio of 44.53 and an EV/EBITDA ratio of 22.67, the market appears to be pricing in significant growth expectations. Analysts estimate revenue growth of 17.7% for the next year. Given the company's diversified portfolio and strong financial profile, it is well-positioned to deliver long-term value. The ROE of 3.93% and ROIC of 2.85% indicate a relatively efficient use of capital. The Net Debt / EBITDA ratio of 4.88 suggests a moderate level of leverage.

Acquisition and Integration

The Essco acquisition has been a success, with few obstacles encountered during integration. The business has performed well, with impressive growth from Essco and Martin. The company expects this growth to continue, driven by strong customer bases and growth trajectories in their regions.

3. NewsRoom

Transcat, Inc. $TRNS Shares Purchased by Geode Capital Management LLC

Dec -01

Source: defenseworld.net

Envestnet Asset Management Inc. Grows Stock Position in Transcat, Inc. $TRNS

Nov -16

Source: defenseworld.net

Transcat, Inc. (TRNS) Misses Q2 Earnings Estimates

Nov -04

Source: zacks.com

Transcat, Inc. (TRNS) Q2 2026 Earnings Call Transcript

Nov -04

Source: seekingalpha.com

Transcat Reports Strong Fiscal Second Quarter 2026 Financial Results with Double-Digit Revenue & Gross Profit Growth

Nov -03

Source: businesswire.com

Transcat to Attend Upcoming Investor Conferences in November

Oct -28

Source: businesswire.com

Wall Street Analysts Predict a 34.63% Upside in Transcat (TRNS): Here's What You Should Know

Oct -27

Source: zacks.com

Transcat to Host Second Quarter Fiscal Year 2026 Conference Call and Webcast on Monday, November 3, 2025 at 4:30 p.m. Eastern Time

Oct -21

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.87%)

6. Segments

Service

Expected Growth: 6.5%

Transcat's 6.5% growth is driven by increasing demand for calibration services in the life sciences and pharmaceutical industries, expansion into new markets, and strategic acquisitions. Additionally, the company's focus on providing high-quality services, investing in technology, and building strong customer relationships contribute to its growth momentum.

Distribution

Expected Growth: 7.5%

Transcat, Inc.'s 7.5% distribution growth is driven by increasing demand for calibration services in the life sciences and pharmaceutical industries, expansion into new markets, and strategic acquisitions. Additionally, the company's focus on providing high-quality services, investing in technology, and building strong customer relationships contribute to its growth momentum.

7. Detailed Products

Calibration Services

Transcat offers calibration services for a wide range of instruments and equipment, ensuring accuracy and reliability in various industries.

Environmental Monitoring

Transcat provides environmental monitoring solutions, including data loggers and sensors, to track and monitor environmental conditions.

Laboratory Services

Transcat offers laboratory services, including testing and analysis, to support research and development, quality control, and regulatory compliance.

Measurement and Inspection

Transcat provides measurement and inspection solutions, including precision instruments and software, to support quality control and process improvement.

Process Optimization

Transcat offers process optimization solutions, including consulting and implementation services, to improve efficiency and reduce costs.

Quality and Regulatory Compliance

Transcat provides quality and regulatory compliance solutions, including auditing and training, to support compliance with industry standards and regulations.

8. Transcat, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Transcat, Inc. is medium due to the availability of alternative calibration services from competitors.

Bargaining Power Of Customers

The bargaining power of customers is low due to the specialized nature of Transcat's calibration services, making it difficult for customers to switch to alternative providers.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium due to the presence of multiple suppliers of calibration equipment and services, giving Transcat some negotiating power.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the calibration services industry, including the need for specialized expertise and equipment.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of several established competitors in the calibration services industry, leading to a competitive market.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	1.81%
Debt Cost	6.97%
Equity Weight	98.19%
Equity Cost	6.97%
WACC	6.97%
Leverage	1.85%

11. Quality Control: Transcat, Inc. passed 7 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

Global Industrial

A-Score: 5.5/10

Value: 4.0

Growth: 4.9

Quality: 6.9

Yield: 7.0

Momentum: 6.0

Volatility: 4.3

1-Year Total Return ->

H&E Equipment Services

A-Score: 5.4/10

Value: 3.3

Growth: 6.2

Quality: 5.8

Yield: 3.0

Momentum: 9.5

Volatility: 4.3

1-Year Total Return ->

DXP Enterprises

A-Score: 4.9/10

Value: 3.7

Growth: 7.1

Quality: 4.5

Yield: 0.0

Momentum: 10.0

Volatility: 4.0

1-Year Total Return ->

EVI Industries

A-Score: 4.4/10

Value: 4.7

Growth: 7.0

Quality: 6.8

Yield: 1.0

Momentum: 4.5

Volatility: 2.3

1-Year Total Return ->

Titan Machinery

A-Score: 4.4/10

Value: 7.8

Growth: 4.4

Quality: 2.8

Yield: 0.0

Momentum: 6.5

Volatility: 4.7

1-Year Total Return ->

Transcat

A-Score: 3.1/10

Value: 2.7

Growth: 6.2

Quality: 5.3

Yield: 0.0

Momentum: 0.0

Volatility: 4.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

3.36%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

6.97%

Transcat, Inc. - US8935291075

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on TRNS

1.c. Company Highlights

Expensive

Stable Momentum

Average Yield

Earnings Beats

Revenues Beats

Strong Momentum

Revenues Miss

Average Quality

Earnings Miss

Average Growth

Weak Momentum

Fairly Valued

2. Transcat's Q2 FY2026 Earnings: Strong Performance Driven by Diversified Portfolio

Segment Performance

Outlook and Growth Prospects

Valuation and Growth Expectations

Acquisition and Integration

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.87%)

6. Segments

Service

Expected Growth: 6.5%

Distribution

Expected Growth: 7.5%

7. Detailed Products

Calibration Services

Environmental Monitoring

Laboratory Services

Measurement and Inspection

Process Optimization

Quality and Regulatory Compliance

8. Transcat, 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: Transcat, Inc. passed 7 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

54.92$

Current Price

54.92$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA