Why NVE Corporation Popped Today
Key Points
NVE Corporation goes unnoticed on Wall Street, but just reported a 23% sales growth quarter.
Tiny NVE is profitable and boasts strong free cash flow.
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NVE Corporation (NASDAQ: NVEC) stock, a nanotech company manufacturing electron-based "spintronic" sensors, soared 14.7% through 10:20 a.m. ET this morning after reporting earnings for its fiscal Q3 2026.
No analysts follow NVE stock on Wall Street, so it's hard to say whether the company "beat" earnings. Objectively speaking, though, the news was pretty good.
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NVE Q3 earnings
NVE reported $5.8 million in sales for the quarter, up 23% year over year. Earnings grew 11% to $0.70 per share, reversing a trend of declining sales and declining earnings in the first half of the fiscal year.
NVE also announced it will pay a $1 quarterly dividend next month -- more money than the company actually earned.
Is NVE stock a buy?
So NVE stock boasts rapid sales growth and a huge dividend yield -- 5.8% this year, according to Yahoo! Finance. Does this make the stock a "buy"?
I'm not 100% convinced.
Priced at just 25 times earnings, NVE stock wouldn't look expensive if it were growing sales and expanding profit margins, thereby driving earnings growth faster than sales. In fact, the company's earnings grew only 11% for the quarter, though, and the earnings growth rate for the fiscal year to date is still negative.
That said, free cash flow at last report was strong, backing up about 87% of reported net profit. The company has ample cash reserves, too, and its contract R&D business is growing nicely. While the valuation isn't compelling, the spintronic technology is interesting.
At the very least, it's a company worth watching -- if for no other reason, then because Wall Street analysts aren't paying attention at all.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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