OPXS

Optex is a genuinely high-quality small-cap. Revenue has compounded from $18.2M (FY2021) to $41.3M (FY2025), with FY2025 up 21.6% and net income up 36.6% to $5.15M. Profitability is improving across the board: operating income jumped 47.9% to $7.13M and operating margin widened to 17.3% from 14.2%, while ROE sits at a strong 21.2%. The balance sheet is pristine — liabilities/equity of just 0.24x, $6.39M cash (up from ~$1M), and operating cash flow of $6.93M that comfortably exceeds net income and dwarfs $494K of capex. At $13.56 the stock trades at 18.3x trailing EPS and 2.3x sales, which is undemanding for a business growing 20%+ with rising returns and no debt.

The filing reframes the risk, though. Growth is not uniform: the two segments tell different stories. Applied Optics Center (Dallas) is the healthier engine — 32.0% gross margin and 20.6% operating margin. The larger Optex Richardson segment runs leaner at 25.5% gross margin and 15.3% operating margin, and it absorbed an $804K asset impairment in FY2025. More importantly, management explicitly flags 'significant reduction in spending for U.S. ground system military programs, in combination with the U.S. government shutdown and CR, which has a direct impact on the Optex Richardson segment revenue.' Richardson supplies sighting systems for Abrams/Bradley/Stryker land vehicles — exactly the ground-systems budget line under pressure. That is a concrete forward headwind to the bigger of the two segments.