Cadre (CDRE)

Aerospace and defense company Cadre (NYSE:CDRE) fell short of the markets revenue expectations in Q3 CY2025, but sales rose 42.5% year on year to $155.9 million. On the other hand, the company’s outlook for the full year was close to analysts’ estimates with revenue guided to $627 million at the midpoint. Its GAAP profit of $0.27 per share was in line with 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 performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Luckily, Cadre’s sales grew at a decent 8.3% compounded annual growth rate over the last five years. Its growth was slightly above the average industrials company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Cadre’s annualized revenue growth of 13.4% 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 16.6% year-on-year growth. This segment has outperformed its total sales during the same period, lifting the company’s performance.

This quarter, Cadre achieved a magnificent 42.5% year-on-year revenue growth rate, but its $155.9 million of revenue fell short of Wall Street’s lofty estimates.

Looking ahead, sell-side analysts expect revenue to grow 8.5% over the next 12 months, a deceleration versus the last two years. Still, this projection is above average for the sector and implies the market is baking in some success for its newer products and services.

Cadre’s operating margin has been trending up over the last 12 months and averaged 10.1% over the last five years. Its solid profitability for an industrials business shows it’s an efficient company that manages its expenses effectively.

Looking at the trend in its profitability, Cadre’s operating margin might fluctuated slightly but has generally stayed the same 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.

In Q3, Cadre generated an operating margin profit margin of 12%, up 7 percentage points year on year. This increase was a welcome development and shows it was more efficient.

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 flat EPS over the last five years was below its 8.3% annualized revenue growth. However, its operating margin didn’t change during this time, telling us that non-fundamental factors such as interest and taxes affected its ultimate earnings.

Diving into the nuances of Cadre’s earnings can give us a better understanding of its performance. Cadre recently raised equity capital, and in the process, grew its share count by 49.1% over the last five years. This has resulted in muted earnings per share growth but doesn’t tell us as much about its future. We prefer to look at operating and free cash flow margins in these situations.

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.

For Cadre, its two-year annual EPS growth of 9% was higher than its five-year trend. Accelerating earnings growth is almost always an encouraging data point.

In Q3, Cadre reported EPS of $0.27, up from $0.09 in the same quarter last year. This print beat analysts’ estimates by 3.3%. Over the next 12 months, Wall Street expects Cadre’s full-year EPS of $1.12 to grow 27.1%.

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 9.1% over the last five years, better than the broader industrials sector.

Cadre’s free cash flow clocked in at $21.63 million in Q3, equivalent to a 13.9% margin. Its cash flow turned positive after being negative in the same quarter last year, but we wouldn’t read too much into the short term because investment needs can be seasonal, causing temporary swings. Long-term trends are more important.

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).

Although Cadre hasn’t been the highest-quality company lately because of its poor bottom-line (EPS) performance, it historically found a few growth initiatives that worked out well. Its five-year average ROIC was 14%, impressive for an industrials business.

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. Over the last few years, Cadre’s ROIC has unfortunately decreased. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.

Cadre reported $150.9 million of cash and $327.3 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 $115.8 million of EBITDA over the last 12 months, we view Cadre’s 1.5× net-debt-to-EBITDA ratio as safe. We also see its $4.98 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.

We were impressed by how significantly Cadre blew past analysts’ EBITDA expectations this quarter. We were also glad its EPS was in line with Wall Street’s estimates. On the other hand, its Products revenue missed and its revenue fell short of Wall Street’s estimates. Zooming out, we think this was a mixed quarter. The stock remained flat at $42.29 immediately after reporting.

Updated: December 3, 2025 at 10:22 PM EST

We think that the latest earnings result is only one piece of the bigger puzzle. If you’re deciding whether to own Cadre, you should also grasp the company’s longer-term business quality and valuation.

Cadre isn’t a bad business, but we have other favorites. To kick things off, its revenue growth was good over the last five years. And while Cadre’s diminishing returns show management's prior bets haven't worked out, its projected EPS for the next year implies the company’s fundamentals will improve.

Cadre’s P/E ratio based on the next 12 months is 28.5x. This valuation multiple is fair, but we don’t have much faith in the company. We're pretty confident there are more exciting stocks to buy at the moment.

Wall Street analysts have a consensus one-year price target of $48.50 on the company (compared to the current share price of $42.87).