Cadre (CDRE)

Aerospace and defense company Cadre (NYSE:CDRE) fell short of the market’s revenue expectations in Q4 CY2025, with sales falling 5% year on year to $167.2 million. On the other hand, the company’s full-year revenue guidance of $747 million at the midpoint came in 2.5% above analysts’ estimates. Its GAAP profit of $0.27 per share was 32.5% below analysts’ consensus estimates.

Company Overview

Originally known as Safariland, Cadre (NYSE:CDRE) specializes in manufacturing and distributing safety and survivability equipment for first responders.

Many law enforcement suppliers companies require licensing and clearance to manufacture products such as firearms. These companies can enjoy long-term contracts with law enforcement and corrections bodies, leading to more predictable revenue. It is still unclear how the recent focus on excessive force and police accountability will impact longer-term demand. On the one hand, lethal force products could become less popular. On the other hand, products such as body cams that aid in the transparency of policing could become standard. Generally, the sector’s fate will also ebb and flow with state or local budgets, and there is high reputational risk, as one mishap or bad headline can change a company’s fortunes.

Cadre's competitors include Apogee Enterprises (NASDAQ:APOG), Helios Technologies (NYSE:HLIO)

A company’s long-term sales performance can indicate its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Thankfully, Cadre’s 8.6% annualized revenue growth over the last five years was decent. Its growth was slightly above the average industrials company and shows its offerings resonate with customers.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Cadre’s annualized revenue growth of 12.5% over the last two years is above its five-year trend, suggesting its demand recently accelerated.

We can dig further into the company’s revenue dynamics by analyzing its most important segment, Products. Over the last two years, Cadre’s Products revenue (body armor, corrections tools, sensors) averaged 18.4% year-on-year growth. This segment has outperformed its total sales during the same period, lifting the company’s performance.

This quarter, Cadre missed Wall Street’s estimates and reported a rather uninspiring 5% year-on-year revenue decline, generating $167.2 million of revenue.

Looking ahead, sell-side analysts expect revenue to grow 23.1% over the next 12 months, an improvement versus the last two years. This projection is eye-popping and suggests its newer products and services will catalyze better top-line performance.

Cadre has managed its cost base well over the last five years. It demonstrated solid profitability for an industrials business, producing an average operating margin of 10.2%.

Analyzing the trend in its profitability, Cadre’s operating margin decreased by 1.1 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Cadre generated an operating margin profit margin of 12.2%, down 4.5 percentage points year on year. This contraction shows it was less efficient because its expenses increased relative to its revenue.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Cadre’s full-year EPS grew at an astounding 24.7% compounded annual growth rate over the last four years, better than the broader industrials sector.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

Cadre’s EPS grew at a weak 2% compounded annual growth rate over the last two years, lower than its 12.5% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.

Diving into the nuances of Cadre’s earnings can give us a better understanding of its performance. A two-year view shows Cadre has diluted its shareholders, growing its share count by 13.6%. This dilution overshadowed its increased operational efficiency and has led to lower per share earnings.

In Q4, Cadre reported EPS of $0.27, down from $0.32 in the same quarter last year. This print missed analysts’ estimates, but we care more about long-term EPS growth than short-term movements. Over the next 12 months, Wall Street expects Cadre’s full-year EPS of $1.06 to grow 37.4%.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Cadre has shown impressive cash profitability, enabling it to ride out cyclical downturns more easily while maintaining its investments in new and existing offerings. The company’s free cash flow margin averaged 9% over the last five years, better than the broader industrials sector.

Cadre’s free cash flow clocked in at $17.98 million in Q4, equivalent to a 10.7% margin. The company’s cash profitability regressed as it was 2 percentage points lower than in the same quarter last year, but it’s still above its five-year average. We wouldn’t read too much into this quarter’s decline because capital expenditures can be seasonal and companies often stockpile inventory in anticipation of higher demand, causing short-term swings. Long-term trends carry greater meaning.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Cadre’s five-year average ROIC was 12.5%, higher than most industrials businesses. This illustrates its management team’s ability to invest in profitable growth opportunities and generate value for shareholders.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. On average, Cadre’s ROIC decreased by 4.1 percentage points annually each year over the last few years. Only time will tell if its new bets can bear fruit and potentially reverse the trend.

Cadre reported $122.9 million of cash and $322.3 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $111.7 million of EBITDA over the last 12 months, we view Cadre’s 1.8× net-debt-to-EBITDA ratio as safe. We also see its $5.22 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was great to see Cadre’s full-year revenue guidance top analysts’ expectations. On the other hand, its revenue missed and its EBITDA fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 1.7% to $40 immediately following the results.

Updated: March 10, 2026 at 11:32 PM EDT

Before deciding whether to buy Cadre or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

There are some positives when it comes to Cadre’s fundamentals. First off, its revenue growth was good over the last five years and is expected to accelerate over the next 12 months. And while its diminishing returns show management's recent bets still have yet to bear fruit, its projected EPS for the next year implies the company’s fundamentals will improve. On top of that, its remarkable EPS growth over the last four years shows its profits are trickling down to shareholders.

Cadre’s P/E ratio based on the next 12 months is 28.9x. When scanning the industrials space, Cadre trades at a fair valuation. If you believe in the company and its growth potential, now is an opportune time to buy shares.

Wall Street analysts have a consensus one-year price target of $54 on the company (compared to the current share price of $38.95), implying they see 38.6% upside in buying Cadre in the short term.