Freedom Capital Markets adjusted its recommendation on STRATTEC Security (STRT) from Buy to Hold after reviewing the company's second-quarter fiscal 2026 results, while simultaneously raising the price target to $93.00 from $91.00. The stock is trading close to its 52-week high of $92.50 and has returned roughly 83% over the past year.
For the quarter, STRATTEC reported revenue of $137.5 million, up 5.9% year over year. Gross margin expanded to 16.5%, and adjusted EBITDA rose to $12.3 million. On a trailing twelve-month basis, the company’s annual revenue growth stands at 6.01%, reflecting a steady top-line trajectory across the past year.
Adjusted net income attributable to STRT reached $7.1 million in the quarter, compared with $2.6 million in the year-ago period. The company attributed this improvement to effective pricing and cost management actions. Valuation metrics reported in the firm’s analysis show a price-to-earnings ratio of 13.34.
STRATTEC’s balance sheet remained a point of strength at the end of the quarter, with $99.0 million in cash against $2.5 million in debt, and operating cash flow of $13.9 million. These metrics contribute to an above-average financial health score of 3.77 and a current ratio of 2.61, indicating that near-term liquid assets exceed short-term obligations by a comfortable margin.
Freedom Capital highlighted management’s caution regarding the back half of the fiscal year, noting mixed production trends that could lead to a more moderate second-half performance. At the same time, the analyst said the quarter supports "a more stable earnings profile versus prior periods." Additional balance-sheet and cash generation indicators cited include an Altman Z-Score of 5.02 and a free cash flow yield of 18%.
Further company-reported results for Q2 fiscal 2026 showed earnings per share of $1.71, beating a forecasted $1.05 by 62.86%. Revenue of $137.5 million exceeded expectations of $132.29 million by 3.94%. Despite the upside to both earnings and revenue, the company’s stock fell 3.97% in premarket trading following the update.
Analysts and investors looking for deeper valuation and financial-health detail can refer to the comprehensive Pro Research Report noted by the research firm, which aggregates metrics such as cash flow, leverage and profitability measures. The combination of stronger margins, higher adjusted EBITDA and improved net income underpins the firm’s revised view that STRATTEC may present a steadier earnings profile, even as production variability clouds the outlook for the remainder of the year.
In summary, the quarter delivered stronger profitability and cash-generation metrics and an improved balance sheet, but management’s guidance on production trends prompted the analyst to temper its rating despite a modest increase in the price target.
About the data cited
All figures cited in this report reflect the company-reported results for Q2 fiscal 2026 and the analyst commentary provided by Freedom Capital Markets. Valuation and financial health metrics referenced originate from the analyst and associated research materials.