Escotec Technologies (ESE) Q1 EPS Strength Reinforces Bullish Earnings Growth Narrative

ESCO Technologies (ESE) opened Q1 2026 with revenue of US$289.7 million and basic EPS of US$1.11, setting the tone for how its earnings story is evolving this year. The company has seen quarterly revenue move from US$247.0 million in Q1 2025 to US$289.7 million in Q1 2026, while basic EPS over that span has ranged from US$0.91 in Q1 2025 to US$1.11 most recently. On a trailing twelve month basis, EPS sits at US$4.83 on revenue of about US$1.2 billion. With net profit margins in the data edging higher over the last year, the latest results keep the focus firmly on how sustainably ESCO can convert sales into earnings.

See our full analysis for ESCO Technologies.

With the headline numbers on the table, the next step is to see how this earnings run rate lines up against the widely followed growth and risk narratives that have built up around ESCO in recent years.

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13.2% earnings growth with margins at 10.7%

• Over the last 12 months, ESCO generated EPS of US$4.83 and a net profit margin of 10.7%, compared with 10.4% a year earlier, on US$1.2b of revenue.
• What stands out for the bullish view is that EPS growth of 13.2% over the past year and an average of 22.5% a year over five years lines up with the current 10.7% margin, which has edged up from 10.4%. This suggests profit per dollar of sales has been holding up as the business has scaled.
  • Supporters point to that 13.2% earnings growth alongside revenue of US$1.2b as evidence that profitability has not relied solely on one off items in the recent period.
  • The five year 22.5% annual EPS trend, together with the margin improvement from 10.4% to 10.7%, is often cited as backing a longer running earnings story rather than a single period spike.

Premium P/E and DCF gap to current price

• ESCO trades on a trailing P/E of 52.5x compared with the US Machinery industry average of 27.9x and a peer average of 40x. The DCF fair value in the data is US$182.21 against a current share price of US$253.10.
• Bears focus on this valuation gap, arguing that a share price of US$253.10 sitting above the US$182.21 DCF fair value and a P/E that is well ahead of industry and peer levels means expectations are already high, even though last 12 month net income excluding extra items is US$124.68 million and margins are 10.7%.
  • Critics highlight that the DCF figure of US$182.21 is well below the current price, so anyone buying today is paying above that modelled value despite the 13.2% earnings growth in the data.
  • They also point out that the 52.5x P/E multiple is almost double the 27.9x industry average, which is a large premium to pay even with analysts forecasting about 21.9% annual earnings growth.

Q1 2026 sets the base for a 22.5% five year EPS trend

• Q1 2026 net income excluding extra items was US$28.69 million on revenue of US$289.66 million, contributing to trailing 12 month net income of US$124.68 million and EPS of US$4.83, which fits into a five year EPS growth trend of about 22.5% a year.
• Supporters of the bullish view argue that having Q1 2026 EPS at about US$1.11 and trailing EPS at US$4.83, alongside analyst expectations for roughly 21.9% yearly earnings growth and revenue growth of about 10% a year, shows the current run rate is consistent with both the recent 13.2% earnings growth and the longer term 22.5% annual EPS trend.
  • Consensus narrative notes that revenue over the last year, at roughly US$1.2b, grew at about 10% while earnings grew 13.2%, which lines up with forecasts that earnings can grow faster than sales in the models provided.
  • What is interesting here is that despite insider selling being described as not substantial in the data, the share price still carries a high P/E of 52.5x. This suggests the recent financial track record and forecast profile remain central to how the stock is currently being valued.

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Next Steps

Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on ESCO Technologies's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move.

Explore Alternatives

For all its earnings momentum, ESCO's 52.5x P/E and DCF value of US$182.21 against a US$253.10 share price highlight a rich valuation that may limit appeal for value focused investors.

If that premium price tag makes you hesitate, shift your attention to 53 high quality undervalued stocks, where you can quickly spot companies priced more conservatively relative to their fundamentals and act before the crowd.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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