ESCO Technologies surges on earnings beat, guidance hike
Record orders of $557M and backlog of $1.4B drive full-year outlook increase
ESCO Technologies shares rose in Thursday trading after the engineered solutions provider reported first-quarter results that handily exceeded analyst expectations and raised full-year guidance, driven by a surge in orders that reached a company record.
The St. Louis-based company reported adjusted earnings per share of $1.64 for the fiscal first quarter, beating the consensus estimate of $1.32 by 24.2%, according to the earnings announcement. Revenue climbed 35% year-over-year to $290 million, narrowly above the $289.3 million analysts had projected. GAAP earnings from continuing operations increased 41% to $1.11 per share.
The standout performance came from new orders, which surged 143% to $557 million, creating a record backlog of $1.4 billion and a book-to-bill ratio of 1.92 times, indicating strong demand visibility. Executives said they were "confident to raise full year earnings guidance" following the quarter's results.
Building on the momentum, ESCO increased its fiscal 2026 guidance. The company now projects adjusted earnings per share of $7.90 to $8.15, raising the midpoint by $0.38 from prior expectations. Revenue guidance for the full year was set at $1.29 billion to $1.33 billion.
The strong results extend ESCO's recent rally. The stock closed at $238.40 on Thursday, giving the company a market capitalization of $6.2 billion. Shares have gained significantly over the past year, trading well above the 52-week low of $129.93 and near the high of $239.03. The current price represents a premium to consensus analyst targets of $255, according to market data.
ESCO Technologies provides engineered solutions across industrial, commercial, and utility sectors, with particular strength in testing and measurement, communication systems, and utility infrastructure. The company serves the aerospace and defense markets, which analysts identified as a key growth driver ahead of earnings.
Prior to Thursday's report, analysts had expressed cautious bullish sentiment on the stock. In February 2025, Benchmark maintained a "Strong Buy" rating and increased its price target from $150 to $190, while Stephens & Co. reiterated a "Buy" rating with a $175 target, according to analyst coverage data.
The 143% surge in orders represents a significant acceleration for the company, suggesting robust demand across its core markets. The book-to-bill ratio of 1.92 times means the company booked nearly two dollars in new orders for every dollar of revenue recognized, typically indicating future revenue growth potential.
With a record backlog of $1.4 billion, ESCO has substantial revenue visibility for the remainder of fiscal 2026 and beyond. The raised guidance suggests management expects the strong order momentum to continue through the year.
The company's profit margin stands at 27.3%, with an operating margin of 8.8%, according to recent financial data. ESCO has a relatively high price-to-earnings ratio of 53.2, reflecting investor expectations for continued growth.
Analysts will be watching for commentary on ESCO's ability to convert the record backlog into revenue and maintain the elevated order pace in subsequent quarters. The aerospace and defense sector has faced supply chain challenges, and investors will seek assurance that ESCO can navigate these headwinds while meeting increased demand.