Industrial manufacturer Standex (NYSE: SXI) met Wall Street’s revenue expectations in Q1 CY2026, with sales up 8.1% year on year to $224.6 million. Its non-GAAP profit of $2.21 per share was in line with analysts’ consensus estimates.

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Commenting on the quarter's results, President and Chief Executive Officer David Dunbar said, "We delivered another quarter with year-on-year organic growth and strong operating performance. Our sales increased 8.1% year-on-year to $224.6 million driven by 8% contribution from new products and more than 30% contribution from sales into fast growth markets. We realized 6.5% organic growth with a book to bill of 1.05. Our Electronics segment grew 6.8% organically with a book to bill of 1.14. We are well positioned to deliver mid-to-high single-digit organic growth again in the fiscal fourth quarter, primarily driven by new product launches, and strong tailwinds in the electrical grid, space, defense and aviation end markets. Sales from fast growth markets totaled approximately $69 million in the fiscal third quarter and are expected to reach approximately $270 million for the full fiscal year 2026.

Company Overview

Holding over 500 patents globally, Standex (NYSE: SXI) is a manufacturer and distributor of industrial components for various sectors.

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Regrettably, Standex’s sales grew at a mediocre 7.4% compounded annual growth rate over the last five years. This was below our standard for the industrials sector and is a tough starting point for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Standex’s annualized revenue growth of 10.2% over the last two years is above its five-year trend, suggesting its demand recently accelerated.

This quarter, Standex grew its revenue by 8.1% year on year, and its $224.6 million of revenue was in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 3.6% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and suggests its products and services will face some demand challenges.

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Operating Margin

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.

Standex has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 16.6%. This result isn’t surprising as its high gross margin gives it a favorable starting point.

Looking at the trend in its profitability, Standex’s operating margin rose by 9.3 percentage points over the last five years, as its sales growth gave it operating leverage.

In Q1, Standex generated an operating margin profit margin of 40.4%, up 25.8 percentage points year on year. The increase was solid, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Standex’s EPS grew at 17.3% compounded annual growth rate over the last five years, higher than its 7.4% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Standex’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, Standex’s operating margin expanded by 9.3 percentage points over the last five years. On top of that, its share count shrank by 1.6%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Standex, its two-year annual EPS growth of 10.3% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q1, Standex reported adjusted EPS of $2.21, up from $1.95 in the same quarter last year. This print was close to analysts’ estimates. Over the next 12 months, Wall Street expects Standex’s full-year EPS of $8.56 to grow 8.3%.

Key Takeaways from Standex’s Q1 Results

We were impressed by how significantly Standex blew past analysts’ adjusted operating income expectations this quarter. On the other hand, its EBITDA missed and its revenue was in line with Wall Street’s estimates. Overall, this quarter could have been better. The stock remained flat at $273.49 immediately following the results.

Should you buy the stock or not? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).