INNOVATIVE SOLUTIONS & SUPPORT INC (ISSC) Stock Analysis
INNOVATIVE SOLUTIONS & SUPPORT INC
▾ What's in the 59/100 risk score? (higher = riskier)
Contributions (weight × component score) sum to the total. This near-term score now includes fundamental health (leverage, FCF trend, DCF applicability). It excludes the Altman Z score, whose retained-earnings input this filer does not report separately. See the Financial Health section for the full balance-sheet read.
How to read ISSC
A profitable, cash-generating business — our discounted-cash-flow estimate is the primary lens, cross-checked against what growth the price implies and against peers.
-
1
The verdict + intrinsic value (our DCF) ↓
Our estimate of what a share is worth, versus today's price.
-
2
Reverse-DCF + the interactive calculator ↓
See the growth the price assumes, then flex every assumption yourself to pressure-test it.
-
3
Football field + peers ↓
A cross-check across methods and against comparable companies.
Is now a good time to buy ISSC?
Macro: Neutral / mid-cycle
ISSC trades at $20.95 vs an estimated
intrinsic value
of $5.28
— a +296.6% premium to model IV.
Today's price is consistent with ISSC's owner-earnings free cash flow per share growing about 48.4% per year 5-YR · SCENARIO PATH over the next 5 years (the
price-implied growth rate).
Our DCF projects
modeled growth
of 25.0% per year based on history + sector defaults
(analyst consensus estimates not yet integrated).
Note: this is a 5-year, per-share view. The Reverse-DCF section below asks the same question on a stricter 10-year free-cash-flowFree Cash Flow (FCF) — Operating cash flow minus capital spending: cash left after a company covers operating costs, taxes and interest and reinvests in the business — but BEFORE repaying debt principal or paying dividends. The cash actually available to investors.
Why it matters: A company can show big profits on paper while burning through cash. FCF is what actually fills the bank account.
Reference: Healthy mature businesses convert 8–15% of revenue into FCF · Growth companies often negative
Full explanation → basis — so its growth number is different, not contradictory.
▾ Exactly how this 5-year figure is computed
Current price: $20.95 (live)
Discount rate: 15.9%; terminal growth: 3.0%
Forecast: 5 years explicit growth, then a linear fade to terminal; end-of-period cash flows discounted to today
Growth path: the model's scenario-weighted path (conservative 40% / base 35% / optimistic 25% — assumed weights, not measured probabilities) — see the "Three Scenarios, Weighted" table below for the three IVs
Method: solve for the constant 5-year per-share growth rate that, run through this same structure, makes the intrinsic value equal today's price. (The 10-year figure below uses a flat 10-yr path instead — hence a different number.)
Not investment advice. The model can be wrong. Verify the assumptions in the sections below and consider consulting a licensed advisor for significant decisions.
What return would ISSC pay as a bond?
Treat the share as a bond: the "coupon" is the cash an owner could take out this year, and unlike a real bond that coupon can grow. Fix today's price and a conservative growth path, and the only unknown left is the return. That number is comparable across every kind of company — which is the point.
Plainly: at $20.95, ISSC pays a 1.2% owner-earnings coupon today. If that coupon grows 15.0% a year for five years and then settles toward 2.5%, and a buyer in year 10 pays 15× that year's owner earnings, the whole trade returns about -2.7% a year — 7.7 points less than a Treasury with none of the business risk. By year 5 the coupon on today's price would be 2.5% (the "yield on cost" Buffett talks about). Our DCF demanded 15.9% for a business this risky; this read falls short of that bar, which is the same conclusion the verdict above reaches by a different route.
What growth must the market believe? Reverse DCF — Instead of asking "what is this stock worth?", asks "what growth rate is the current market price already assuming?"
Why it matters: It crystallizes the bull thesis as a single number you can argue with. If the market expects 40% growth for 10 years and you do not believe that, the stock is overvalued.
Reference: 10–15% = sustainable for strong companies · 20–25% = exceptional · 30%+ = historically very rare
Traditional DCF asks "what is this stock worth?" Reverse DCF flips it: it treats today's price as correct and solves for the growth rate that justifies it. In plain terms — if our model is right about everything else, the company's cash flow would have to grow (or shrink) by this much every year for the next 10 years for today's price to make sense. If that required growth looks unrealistic, the price is stretched; if it looks easy to beat, the price may be cheap.
Why it matters: A company can show big profits on paper while burning through cash. FCF is what actually fills the bank account.
Reference: Healthy mature businesses convert 8–15% of revenue into FCF · Growth companies often negative
Full explanation → must grow at:
▾ Exactly how this 10-year figure is computed
Forecast length: 10 years, single flat growth rate (no fade)
Terminal growth after year 10: 3.0%
Discount rate: 15.9% (the rate the model used)
Price used: $20.95 — the live price shown on this page (not frozen)
Method: solve for the constant annual growth rate that makes the discounted 10-year FCF stream + terminal value equal today's price.
Approaching the upper limit of what any company has sustained for a full decade at scale. The bull case requires a unique, irreplicable advantage.
For reference: Historically near-impossible — sustaining 30%+ cash-flow growth for a decade at scale is exceedingly rare.
▾ How we computed this · Reality check thresholds · Assumptions
- Starting FCF/share: $0.25 (TTM)
- Discount RateDiscount Rate — The annual return you demand for taking single-stock risk instead of buying a safe Treasury or index fund.
Why it matters: Higher discount rate = stricter valuation (a stock has to produce more cash to be worth holding). Lower = more generous.
Reference: 8–12% is standard · 9–10% matches S&P 500 historical return · Below 7% is illogical for single-stock risk
Full explanation →: 15.9% — standard 8-12%; 9-10% matches S&P 500 historical return - Terminal Growth RateTerminal Growth Rate — The growth rate we assume the company holds forever, after the explicit 10-year forecast period ends.
Why it matters: It anchors the long-tail value. Cannot mathematically exceed long-term GDP growth or the company eventually becomes larger than the global economy.
Reference: 2–3% (matches long-term US GDP growth) · Above 4% is mathematically problematic
Full explanation →: 3.0% — matches long-term GDP growth - Forecast horizon: 10 years explicit + terminal perpetuity
| ≤ 0% | Priced for decline — likely undervalued OR dying business |
| 5-12% | Reasonable; sustainable for quality businesses |
| 12-18% | Demanding — strong execution required |
| 18-25% | Exceptional — few companies sustain for a decade |
| 25-35% | Heroic — historically very rare |
| 35%+ | Borderline impossible at scale |
Sustaining 30%+ cash-flow growth for a full decade at scale is exceedingly rare — the bar is brutally high.
Use the interactive calculator below to change the discount rate, growth and terminal-growth assumptions and watch the value move.
Football field: where does the price sit?
Different valuation methods produce different fair-value ranges depending on assumptions. Plotting them together lets you see at a glance whether the current price is reasonable across approaches, or only one specific lens.
Industry multiples sourced from: sector: Technology. See the Peer Basket section below for the peer comparison and its limited-comparables caveat.
How does ISSC stack up against its closest peers?
We take the 4 same-industry companies most similar to ISSC (similar size) and check what investors are paying for each dollar of their revenue (or profits). If ISSC is much more expensive on the same yardstick, that's a red flag — unless you have a specific reason it deserves a premium. For a leveraged business, EV/EBIT and FCF yield (both in the table) are usually more reliable than EV/Sales, because revenue multiples ignore differences in margins and debt.
▾ What's "EV / Sales" in plain English?
EV (Enterprise Value) = market cap + total debt − cash. It's "what you'd pay to buy the entire company outright" — you pay the market cap to shareholders and take over their debt, but you keep their cash. EV is fairer than market cap alone because it includes the debt the new owner inherits.
EV / Sales = EV ÷ annual revenue. So "2.5×" means investors pay $2.50 of enterprise value per $1 of yearly sales. Higher = market is paying more per dollar of sales (usually because they expect future growth or fat margins).
p25 / median / p75 are the 25th, 50th (middle), and 75th percentile of the peers' multiples. Half the peers fall between p25 and p75. The median (p50) is the typical peer — that's the benchmark we compare to.
| EV / SalesEV / Sales — For every $1 of yearly revenue, this is how many dollars investors pay to own the whole business (including debt). Why it matters: Works for pre-profit growth companies where P/E and FCF don't apply. The most apples-to-apples cross-company multiple because it ignores accounting choices. Reference: 1–3x for mature companies · 4–10x for software/SaaS · 10–20x for hypergrowth · >20x is rare and demanding Full explanation → |
0.8x / 1.6x / 2.2x |
Bold middle number = median peer. Half the peers trade above it, half below. Computed over 4 same-industry peers; implausible multiples excluded.
⚠️ Important caveat: peer multiples only work if the peers are genuinely comparable. Always check the peer list below — if the auto-picker grabbed micro-caps or unrelated businesses, the comparison is noise. A medical-device giant priced against tiny biotech startups won't produce a useful signal.
▾ View peer list (8)
| Ticker | Company | Industry | Mcap | EV/Sales | EV/GP | EV/EBIT | FCF Yield |
|---|---|---|---|---|---|---|---|
| TLS | TELOS CORP | IT Services | $358M | 2.2x | 5.9x | — | 5.0% |
| TBRG | TruBridge, Inc. | IT Services | $389M | 1.6x | — | 26.6x | 4.1% |
| PERI | Perion Network Ltd. | IT Services | $331M | 0.8x | — | — | 2.0% |
| GDEV | GDEV Inc. | IT Services | $262M | — | — | — | — |
| ECX | ECARX Holdings Inc. | IT Services ·fallback | $400M | 0.5x | 2.5x | — | 44.7% |
| SLP | Simulations Plus, Inc. | IT Services ·fallback | $346M | 4.4x | 7.5x | — | 3.2% |
| UIS | UNISYS CORP | IT Services ·fallback | $335M | 0.5x | 1.9x | 13.2x | 40.8% |
| RDNW | RideNow Group, Inc. | IT Services ·fallback | $295M | 0.5x | 1.7x | — | 2.8% |
Quality & solvency checks
Cheap stocks can be cheap for a reason. These screens warn when a low valuation comes paired with structural fragility.
Why it matters: Cheap-looking stocks (low P/E or P/B) often have low Z-scores because the market knows the company is dying. Z-score warns you before you fall into a value trap.
Reference: > 3.0 = safe zone · 1.81–3.0 = grey zone · < 1.81 = distress zone
Full explanation →
We can't produce a trustworthy Altman Z here: retained earnings weren't separately reported in our data, so a core input would have to be fabricated. Rather than show a categorical "distress" verdict from an invented number, we mark it unavailable. The classic manufacturing-calibrated model also fits asset-light businesses like this one poorly. Judge financial health from the leverage, cash position, and the measurable Piotroski checks instead.
Why it matters: High score = fundamentals improving. Low score = deteriorating. Especially powerful for filtering cheap stocks: cheap + high F-score historically outperforms; cheap + low F-score is often a value trap.
Reference: 7–9 = strong · 4–6 = mediocre · 0–3 = weak
Full explanation →
▾ The checks — what passed, what didn't (and what we couldn't measure)
-
✓ Positive net incomeNet income $15.6M in FY2025.
-
✓ Positive operating cash flowOperating cash flow $13.3M (was $5.8M the prior year).
-
✗ Cash flow backs up reported profitOperating cash flow $13.3M vs net income $15.6M.Why this matters: When cash generated exceeds reported earnings, profits are high-quality (not propped up by accruals or one-time items).
-
✓ Return on assets improvingReturn on assets 15.1% vs 8.5% a year ago.
-
✓ Debt load (vs assets)Long-term debt is 23.6% of assets vs 34.0% a year ago ($24.4M of $103.4M assets).
-
✗ Short-term liquidity (current ratio)Current ratio 3.04x vs 4.77x a year ago.Why this matters: The current ratio compares assets it can turn to cash within a year against bills due within a year. Below 1.0 means it may struggle to cover near-term obligations.
-
✗ Share count (dilution)Share count rose 2.0% (17.5M → 17.8M year-over-year).Why this matters: Issuing lots of new shares splits the pie into more pieces, shrinking your slice. Stable or falling share count protects existing owners.
-
✗ Pricing power (gross margin)Gross margin 48.1% vs 54.9% a year ago.Why this matters: Rising gross margin means stronger pricing power or lower input costs — a sign of competitive strength. Falling margin signals pressure.
-
✓ Sales per asset (asset turnover)Asset turnover 0.82x vs 0.57x a year ago.
Missing data is never counted as a pass or a fail — it's shown as n/a and excluded from the denominator. Each check compares the company against its own prior year.
What if you assume different inputs?
Here's where we land — and what happens if you change the assumptions. Drag the sliders to set your own Discount RateDiscount Rate — The annual return you demand for taking single-stock risk instead of buying a safe Treasury or index fund.
Why it matters: Higher discount rate = stricter valuation (a stock has to produce more cash to be worth holding). Lower = more generous.
Reference: 8–12% is standard · 9–10% matches S&P 500 historical return · Below 7% is illogical for single-stock risk
Full explanation → (the annual return you demand for single-stock risk) and terminal growth; the value updates live so you can see whether the stock looks cheaper or richer. The discount rate starts at 15.9%, the figure our model used for ISSC. Open Advanced to also change beta, growth and the rate path.
Note: the calculator opens at our published value of $5.28 — it is initialised to the same scenario-weighted result, so the two match exactly on load. The moment you move a slider, the value below becomes a single-path what-if at your assumptions (not the three-scenario weighting), which is why it can differ from the headline once you've touched it.
15.9% — beta-based (CAPM), from this stock's BetaBeta — How much the stock moves when the overall market moves. 1.0 = moves with the market; 1.5 = moves 50% more than the market.
Why it matters: Higher beta = more volatile = should demand higher discount rate. Low beta stocks (utilities, consumer staples) move less.
Reference: Most stocks 0.5–1.5 · Defensives ~0.3 · High-vol tech ~1.5–2.0
Full explanation → of 2.07. The safe Treasury rate plus a premium scaled by how much more (or less) volatile the stock is than the market.
11.0% — sector/quality tier. A simpler hurdle set by industry and business durability: lower for stable, wide-moat companies; higher for speculative or micro-caps.
The headline value and this calculator start at 15.9% — the beta-based rate. Drag the slider to the other rate to see the full range.
+296.6%
At the default assumptions the flat path lands near our published value of $5.28. Move any slider to recompute it with your own.
Move any slider above to recompute this against your own assumptions.
⚙ Advanced — tinker with every input (beta, growth, rate path, margin → full intrinsic value)
ISSC is deeply overvalued by the model, trading at a premium of +226.4% to its intrinsic valueIntrinsic Value — Our DCF model's estimate of what each share is mathematically worth based on projected cash flows.
Why it matters: Compare to current price. Below IV = potentially undervalued. Above IV = priced for growth that must actually happen.
Reference: Model-derived; quality depends on data and assumptions.
Full explanation →. The market appears to be paying for the company's significant revenue growth of 38.3%/yr over four years and consistent profitability. The #1 quantifiable risk is the long-term debt rising from $0M to $24M, which could impact future financial flexibility.
As of 3 months ago
Anatomy of a share
What you're buying per share. Bars are at the same scale so you can see the relative size of revenue, costs, cash flow, and debt — not just read them in a table.
What's free cash flow / what do these mean?
Revenue per share — how much the business earns from customers, divided by the number of shares outstanding. Top of the income statement.
Earnings per share — profit left after operating costs, interest, and taxes, per share. Two versions appear on this page and are not interchangeable: GAAP diluted EPS uses the company's weighted-average diluted share count during the reporting period (this is the "earnings" in "price-to-earnings"); net income per current share divides annual net income by today's share count. They differ whenever the share count has changed.
Owner-earnings free cash flow per share — the cash the business produces for shareholders. Savng's owner-earnings FCF subtracts capital expenditures and stock-based compensation from operating cash flow (SBC is a real dilution cost even though it's non-cash). This is deliberately more conservative than "standard" FCF, which subtracts only capital expenditures — so our figure is lower than the headline FCF you'll see elsewhere. FCF funds dividends, buybacks, debt repayment, and acquisitions; a company can report positive earnings yet negative FCF.
Debt per share — total interest-bearing borrowings divided by shares. High debt-per-share next to thin FCF-per-share is a fragility signal.
What you actually need to decide
Every stock price is a disagreement. Here's the single thing that must go right for the bulls, the single thing that breaks the thesis, and the concrete signposts to watch so you can update your view as real results arrive.
- Next quarter's gross margin trend
- Continued revenue growth rate
- Changes in long-term debt levels
The trend, in plain numbers (FY2024 → FY2025, latest reported)
Straight from the financial statements — no model, no opinion. For a small or unprofitable company, the direction of these numbers usually tells you more than any single valuation.
- Revenue grew +79% to $84.3M.
- Free cash flow rose to $4.5M.
- Net income grew +123% to $15.6M.
- Gross margin shrank to 48% (-7 pts).
Management & Leadership
Limited executive data available. Innovative Solutions & Support Inc. is a publicly traded company, but specific executive details like CEO name and tenure are not provided in the available data.
What They Make
Innovative Solutions & Support Inc. designs and manufactures air data systems, flight management systems, and other advanced avionics for commercial and military aircraft. Their products are sold to original equipment manufacturers and the aftermarket.
End Markets
Revenue Drivers
Why Is It Priced Like This?
Why Customers Pay
The market prices ISSC at a premium of +226.4% to the model, likely due to its strong revenue growth of 38.3%/yr over four years and consistent profitability (net income positive 5/5 yrs). The market may be assigning value to potential new product development or expanded market penetration in specialized avionics, which is not in the model.
Three Scenarios, Weighted
| Scenario | IV | Upside from today's price | Weight |
|---|---|---|---|
| Conservative | $3.75 | -82.1% | 40% |
| Base | $5.36 | -74.4% | 35% |
| Optimistic | $7.62 | -63.6% | 25% |
| Weighted | $5.28 | -74.8% | 100% |
Reading the last column: it is the move from today's price to each value (IV ÷ price − 1). The headline "premium/discount to model IV" measures the same gap from the value's side (price ÷ IV − 1), so the two percentages differ in size and sign by construction — e.g. a price 8% above value is a value 7.4% below price.
What has to be true (historical comparison)
To justify today's price, ISSC's owner-earnings cash flow must grow to roughly 7.2× its current level over 5 years. If profit margins and share count stay roughly constant, that is equivalent to about the same multiple of revenue. Each card below is a real company that grew revenue at a comparable magnitude — possibly in a different industry; the point is the growth magnitude required and its historical base rate, not that ISSC resembles these businesses. The green/amber line shows whether that company cleared or fell short of the bar, and the tag on the right shows how it actually fared afterward (succeeded, faded, or wiped out).
IPO'd at a $20B+ valuation on $1B revenue and a $1.2B loss. Bears called it bloated consulting; the bull case was government + AIP. Outcome still being written.
Real business, big profits, but ~80x P/E. Stock took 17 years to make a new all-time high. The business compounded the whole time; the valuation took a long break.
DVD-by-mail still 99% of revenue when streaming was launched. Stock 30x'd over the next decade — but only because the pivot succeeded. The pivot was not visible in 2007 fundamentals.
Anchors are hand-curated 10-K snapshots. We surface the three whose 5-year revenue growth most-closely brackets the rate required to justify the current price. Source: SEC EDGAR.
Business Model & Valuation
How They Make Money
The company is not buying back shares and funds itself through its positive operating cash flow, which has been positive for 5/5 years.
Free Cash Flow DCF Medium
Standard FCF DCF: positive free cash flow in a sector suited for cash-flow-based valuation. High P/FCF (69x) - market pricing significant growth.
Show advanced inputs
| Revenue Growth | 38.3% |
| Eps Growth | 31.4% |
| Historical Fcf Growth | 3.3% |
| Sector Default | 12.0% |
| Best Estimate | 30.4% |
| Method | blend(70% revenue_cagr, 30% sector) |
| Growth Basis | total |
What this model does NOT do: this is a consolidated owner-earnings FCF model. Standalone segment assumptions: none. It does not project product, services and recurring/cloud lines independently; their combined effect is embedded in the historical revenue and cash-flow trend the model extrapolates. The calculator above can only approximate a segment's impact through the single consolidated growth rate — it cannot model any one line separately. For a true segment-level view, build a separate model from the company's segment disclosures.
Maturity & Competitive Position
Moat Signals
Revenue has grown at 38.3%/yr over four years, from $23M to $84M, and net income has been positive for 5/5 years.
Geography & Markets
Not available from current data sources. The company operates in the technology sector, specifically IT Services, suggesting a global reach, but specific geographic revenue mix is not provided.
Geographic Risks
Market Signals
These are timing signals, not value signals — they describe the stock's recent price behavior, not what the business is worth. Use them for the "the thesis looks good, but is now the moment?" question. Each tile below explains what it's saying.
Why it matters: Short-term contrarian indicator. Extreme readings often precede mean reversion, though not always.
Reference: 30–70 normal · >70 overbought · <30 oversold
Full explanation → (14)39.9NeutralMomentum is balanced — neither overbought nor oversold.
Why it matters: When the fast line crosses above the slow line, short-term momentum is turning up; below, turning down. A timing cue, not a value signal.
Reference: Line above signal = bullish momentum · below = bearish
Full explanation →BullishLine above signalThe fast trend is above the slow trend — short-term momentum is currently upward.
Technicals describe price, not the business. A great company can have a "bearish" tape (a buying chance) and a weak one a "bullish" tape (a trap). Pair these with the valuation and health sections above.
QUALITY
Data Quality & Risk Flags (4 notes — click to expand/collapse)
Guardrail Notes (4)
- Stock-based compensation equals 34% of pre-SBC free cash flow; FCF used here is net of SBC (a real shareholder-dilution cost), so it is lower than the headline GAAP cash-flow figure.
- Growth capped at 25%/yr: the company is buying back 0% of shares per year on top of the underlying business growth, which would push per-share growth above 25% — we cap that to keep the model conservative.
- Price is 3x model IV - market may be pricing optionality, narrative catalysts, or margin expansion beyond what trailing cash flows support.
- Illiquidity discount 7% applied (small/micro-cap — harder to exit, demand a margin).
FINANCIALS
Financial Statements (5-year tables — click to expand)
From INNOVATIVE SOLUTIONS & SUPPORT INC's SEC filings (EDGAR).
Income (5yr)
| Year | Revenue | Net Income | EPS |
|---|---|---|---|
| 2025 | 84.3M | 15.6M | $0.88 |
| 2024 | 47.2M | 7.0M | $0.40 |
| 2023 | 34.8M | 6.0M | $0.35 |
| 2022 | 27.7M | 5.5M | $0.32 |
| 2021 | 23.0M | 5.1M | $0.29 |
Cash Flow (5yr)
| Year | Operating CF | CapEx | − SBC & adj. | Free Cash Flow |
|---|---|---|---|---|
| 2025 | 13.3M | 6.5M | 2.3M | 4.5M |
| 2024 | 5.8M | 657,790 | 1.0M | 4.1M |
| 2023 | 2.1M | 298,373 | 1.5M | 347,373 |
| 2022 | 6.1M | 161,230 | 345,000 | 5.6M |
| 2021 | 4.6M | 340,678 | 341,000 | 3.9M |
How we define FCF: operating cash flow − capital expenditure − stock-based compensation (owner-earnings basis — SBC is a real cost to shareholders even though it's non-cash). Latest year: 13.3M − 6.5M − 2.3M (SBC & adj.) = 4.5M. This is the same owner-earnings FCF definition the valuation model uses.
Balance Sheet
| Total Assets | 103.4M |
| Total Liabilities | 38.8M |
| Equity | 64.6M |
| Total Debt | 24.4M |