Author: Atrium Research September 02, 2026
Luca Perna | Equity Research Associate | [email protected] | 647-969-1027
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What you need to know:
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IEHC announced $6.5M in orders supporting the APKWS program. This brings its backlog to $45M, nearly tripling YoY.
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Last month, IEHC reported Q1 financials that largely beat our estimates including revenue of $10.0M (+59% YoY) and EBITDA of $0.9M (9% margin) compared to negative levels in Q1/26.
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We have increased our expectations for revenue and other financial metrics starting in Q4 and have paired this with a slight increase to our target multiple, resulting in our increased $38.00/share target price.
This morning, IEH Corporation (IEHC:OTCQX) announced that it has received $6.5M in new orders over the last two weeks in support of the APKWS program. This takes the backlog to over $45M, nearly tripling YoY. IEH has been executing on its growth strategy tremendously well, as this follows the blowout earnings it posted last month. We are increasing our estimates in our model as well as increasing our target multiple on FY28E EBITDA. We are maintaining our BUY rating and increasing our target price to $38.00/share (previously $34.00/share) on IEHC.
As a reminder, APKWS (Advanced Precision Kill Weapon System) is a U.S. military program that converts standard unguided 2.75-inch rockets into laser-guided precision munitions. It was originally developed as a low-collateral-damage air-to-ground weapon, but has been adapted for air-to-air use against drones and other aerial threats. IEH has been a critical supplier for this program since its inception. In August 2025, the U.S. Navy awarded BAE Systems a five year $1.7B contract for up to 55,000 units, equating to ~11,000 per year compared to the historical ~8,300 per year (+33%).
Management described the demand for its high-performance hyperboloid connectors as “extraordinary”, given all of the tailwinds in its end markets currently. The Company plans to increase capacity and ramp up production to meet the strong demand. We have made some slight adjustments to our model starting in Q4, increasing our expectations (see Figure 6). As such, in FY28 we are now expecting revenue of $47.1M (+23% YoY), EBITDA of $5.8M, and EPS of $1.59.
Q1 Financials Recap Last month, IEHC reported Q1 financial results that largely surpassed our expectations. Read our note here. The stock rallied strongly on the back of this, being up 32% in the last month and 131% in the last six months. Highlights from the release include:
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Q1/27 revenue was $10.0M (+59% YoY), beating our $7.8M estimate. This came on the back of a 116% YoY increase in defense revenue.
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Backlog was reported at $38.6M (+196% YoY, +39% QoQ); now higher.
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Gross margin of 33%, vs. our 22% estimate and significantly improving over 21% in Q4. This reflects aggressive pricing increases and decreasing gold prices. This represented IEHC’s highest quarterly gross margin in five years.
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EBITDA for the quarter was $0.9M (9% margin) vs. our $0.2M, showcasing that IEHC can get back to its historical profitability levels over the coming years. Adjusted EBITDA was $1.4M (14% margin), adding back $0.5M in SBC.
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Q1/27 net income was $0.7M or $0.26 per basic share, largely beating our ($0.0M) estimate.
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IEHC ended the year with $9.4M in cash and $2.1M in debt.
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