| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 13.06 | 361 |
| Intrinsic value (DCF) | 1.27 | -55 |
| Graham-Dodd Method | 7.02 | 148 |
| Graham Formula | 6.58 | 133 |
Key Tronic Corporation (NASDAQ: KTCC) is a leading provider of contract manufacturing services for original equipment manufacturers (OEMs) in the technology sector. Headquartered in Spokane Valley, Washington, the company specializes in integrated electronic and mechanical engineering, assembly, sourcing, and logistics. Key Tronic offers a comprehensive suite of services, including printed circuit board assembly, precision plastic molding, sheet metal fabrication, and full product assembly. Additionally, the company manufactures and sells keyboards and other input devices. Serving a global clientele, Key Tronic operates in the competitive computer hardware industry, leveraging its engineering expertise and flexible manufacturing solutions to meet the demands of diverse OEMs. With a history dating back to 1969, the company has established itself as a reliable partner for product design, prototyping, and high-volume production.
Key Tronic Corporation presents a mixed investment profile. The company operates in a highly competitive contract manufacturing industry with thin margins, as evidenced by its recent net loss of $2.8 million in the latest fiscal year. However, its diversified service offerings and established relationships with OEMs provide a stable revenue base ($566.9 million in revenue). The lack of dividends and modest market capitalization ($33 million) may deter income-focused investors, but its beta of 0.999 suggests market-neutral volatility. Investors should weigh its engineering capabilities against industry headwinds like supply chain disruptions and pricing pressures.
Key Tronic Corporation competes in the contract manufacturing space by offering end-to-end solutions, from design to full product assembly. Its competitive advantage lies in its integrated engineering and manufacturing capabilities, allowing it to serve as a one-stop shop for OEMs. The company’s expertise in printed circuit board assembly and precision molding differentiates it from smaller competitors. However, it faces intense competition from larger players with greater scale and global reach. Key Tronic’s relatively small size limits its ability to compete on cost efficiency compared to industry giants like Flex Ltd. or Jabil Inc. Its focus on mid-volume production runs and prototyping services provides a niche, but reliance on a few key customers (common in the industry) poses concentration risks. The company’s lack of profitability in recent periods raises concerns about its long-term positioning against more financially stable competitors.