KEQU

Kewaunee is a niche leader in laboratory, healthcare and technical furniture that just put up its biggest year ever: FY2026 revenue of $282M (+17.3%), gross profit up 16.8%, and operating cash flow of $18.6M (+26.0%). Much of that top-line jump reflects the November 2024 Nu Aire acquisition ($55.0M for biosafety cabinets, airflow products and incubators), which the MD&A frames as broadening the channel and pushing the combined firm toward laboratory-furnishings market leadership. The market is paying just 10.8x diluted EPS and 0.4x sales for it — a valuation that prices in stagnation, not a company compounding revenue at a mid-teens clip with a 12.9% ROE.

The headline blemish — net income down 15.7% to $9.62M and EPS down 15.9% to $3.22 — is real but largely a margin and integration story, not a demand story. Operating income fell only 5.9% while operating margin sits at a thin 5.9% and net margin at 3.4%, leaving little cushion if the firm's fixed-price quoting (the MD&A notes prices are 'quoted on a firm basis' so the Company 'bears the burden of possible increases in labor and material costs') runs into steel, lumber or labor inflation. Looking back, FY2024's $18.8M net income was the outlier high; the FY2022-FY2026 path is lumpy, so I weight the durable signals — growing revenue and rising cash generation — over a single year's reported-earnings step-down.