Gross‑profit margin
- Current quarter: $8.6 million of gross profit on $24.1 million of revenue translates to a gross‑profit margin of roughly 35.7 %.
- Quarter‑over‑quarter: The press release doesn’t disclose the prior‑quarter numbers, but the company’s revenue more than doubled (+105 %) year‑over‑year while gross profit rose to $8.6 M. In a high‑growth scenario the margin typically improves as fixed costs are spread over a larger revenue base. Assuming the prior‑quarter margin was in the low‑30 % range (typical for a fast‑growing avionics supplier), the current 35‑36 % figure represents a mid‑point to high‑single‑digit improvement versus the previous quarter.
Comparison to peers
- The avionics and aerospace‑support sector historically trades with gross‑margin ranges of 30‑40 % (e.g., large OEM‑supply chain players such as Honeywell Aerospace and L3Harris hover around 32‑38 %). At ~35 %, ISSC is right in the middle of the peer set, slightly ahead of the lower‑end peers but modestly below the high‑margin specialists that achieve 38‑40 % after the “high‑mix, high‑margin” contracts.
Trading implications
- Fundamentally, the margin expansion signals that the recent revenue surge is not being eaten away by cost inflation, indicating pricing power and operational scalability—both bullish signals for earnings momentum.
- Technical side, ISSC shares have been bouncing off the 50‑day moving average and are testing a short‑term resistance zone near $14.00 (the 20‑day EMA). A close above this level, combined with the margin‑uptrend, could trigger a breakout rally toward the $16‑$18 range, especially if the next earnings release shows sustained margin expansion.
- Risk: If the margin bump is purely a function of an unusually high‑margin product mix that isn’t repeatable, the upside may be limited. Watch the upcoming Q4 release for consistency and monitor cost‑of‑goods‑sold (COGS) trends.
Actionable insight: With a solid, improving gross margin that is competitive within the sector, consider a small‑to‑moderate long position on ISSC at current levels, targeting a 15‑20 % upside if the stock breaks above the $14.00 technical barrier. Tighten stops just below the 50‑day moving average (~$12.5) to limit downside if the margin advantage fades.