Standex International Corporation (NYSE: SXI) shares reached a new 52-week high on Friday after the company reported second-quarter fiscal 2026 financial results that exceeded analyst expectations for both top-line revenue and profitability. The multi-industry manufacturer saw its stock price climb more than 6% to close at $246.19 following the announcement, reflecting investor confidence in the company’s expanding margins and record order intake.
Record Revenue and Profitability Gains
For the fiscal second quarter ended December 31, 2025, Standex reported consolidated net sales of $221.3 million, a 16.6% increase compared to $189.8 million in the same period last year. This growth was underpinned by a 6.4% increase in organic sales, a 9.4% contribution from recent acquisitions, and a modest 0.8% benefit from favorable foreign currency exchange.
Profitability also saw a marked improvement. Adjusted earnings per share (EPS) rose to $2.08, up 8.9% from $1.91 in the prior-year quarter, surpassing the consensus analyst estimate of $2.00. The company’s adjusted operating margin expanded by 30 basis points year-over-year to 19.0%, driven largely by volume gains and strategic pricing initiatives.
Segment Performance Highlights
The Electronics segment, the company’s largest division representing over half of total revenue, was the primary engine of growth. Segment sales reached a record $115.7 million, up 20.6% year-over-year. This performance was supported by an 11.1% organic growth rate and a book-to-bill ratio of 1.08, signaling continued demand in the coming months.
Other segment results were mixed:
Engineering Technologies: Revenue surged 35.3% to $30.6 million, primarily due to the acquisition of McStarlite.
Engraving: Sales increased 13.6% to $35.7 million, reflecting stronger demand in North American and European markets.
Scientific: Revenue grew 5.5% to $18.5 million, though the segment experienced a 2.6% organic decline attributed to lower demand from academic institutions following cuts to National Institutes of Health (NIH) funding.
Specialty Solutions: This segment saw a 7.2% revenue decline, as lower volume weighed on performance.
Growth Drivers and Strategic Outlook
Standex management emphasized the successful execution of its “growth engine” strategy, noting that sales into fast-growth markets—including the electrical grid, renewable energy, and electric vehicles—accounted for approximately 28% of total revenue, or $61 million. New product sales contributed $16.3 million to the quarter, an increase of roughly 13% year-over-year.
The company’s cash position improved significantly, with free cash flow reaching $13.0 million in the quarter, compared to $2.2 million in the prior year. Standex utilized this liquidity to pay down $10 million in debt, reducing its net leverage ratio to 2.3x.
Looking ahead, Standex reiterated its full-year fiscal 2026 outlook, expecting revenue to grow by more than $110 million compared to fiscal 2025. The company raised its annual target for new product sales to $85 million and expects sales into fast-growth markets to exceed $270 million, representing a year-over-year increase of more than 45%.
Executive Commentary and Macro Context
In comments regarding the results, President and Chief Executive Officer, David Dunbar, noted that the company’s long-term efforts to establish a sustainable growth engine are now yielding tangible top-line results. He indicated that the company remains well-positioned to deliver mid-to-high single-digit organic growth in the fiscal third quarter, citing strong tailwinds in the defense, aviation, and electrical grid sectors.
Chief Financial Officer, Ademir Sarcevic, highlighted the company’s operational discipline, pointing to the 30-basis-point expansion in adjusted operating margins despite mixed global market conditions.
The broader industrial sector continues to face headwinds from flat market conditions in North America and potential volatility in global trade policy. However, Standex’s strategic pivot toward high-growth end markets and its robust book-to-bill ratio of 1.04 suggest a degree of insulation from these macro-economic pressures.
Reasons to pass on SXI
- Valuation risk after sharp run-up: Shares hit a new 52-week high and rose more than 6% post-earnings, potentially limiting near-term upside and increasing downside risk if growth moderates.
- Margin expansion remains modest: Adjusted operating margin improved by only 30 basis points year-over-year, suggesting limited incremental profitability despite strong revenue growth.
- Uneven segment performance: Growth was concentrated in Electronics and acquisition-driven Engineering Technologies, while Specialty Solutions posted a revenue decline and Scientific saw an organic contraction.
- Reliance on acquisitions for growth: Nearly 60% of total sales growth came from acquisitions, raising integration risk and reducing visibility into sustainable organic momentum.
- Exposure to funding and policy risks: Scientific segment demand was impacted by NIH funding cuts, highlighting sensitivity to government budgets and external policy decisions.
- Concentration in a single segment: Electronics accounts for more than half of total revenue, increasing earnings exposure to any slowdown in that end market.
- Leverage remains elevated: Net leverage of 2.3x, while improving, still constrains financial flexibility compared with lower-levered industrial peers.
- Macro and trade uncertainties persist: Management acknowledged flat North American markets and potential global trade volatility, which could pressure demand and margins despite current order strength.