CVU

We rate CPI AEROSTRUCTURES INC (CVU) as a Hold with a composite score of 54.1/100 at a current price of $4.09. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in quality (64th percentile) and stability (61th percentile), which together account for the majority of the composite score. Offsetting weakness in value (25th percentile) and investment (31th percentile) tempers our overall conviction. We assign a No Moat rating (23/100), High uncertainty, and Poor capital allocation.

Key items to watch: balance sheet deleveraging progress; the path to profitability; valuation compression risk if growth disappoints. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

CPI AEROSTRUCTURES INC holds a top-quartile position (#0 of 50) within the Manufacturing sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 54.1/100 places it at rank #1382 in our full 7,333-stock universe. At N/A in market capitalization, CPI AEROSTRUCTURES INC is a small-cap player in the Manufacturing space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue contraction of -7% combined with momentum at the 57th percentile paints a cautious picture of the near-term business outlook. The market appears to be pricing in continued challenges, and a catalyst for reversal is not clearly visible from current data.

The margin cascade tells an important story: gross margins of 15% (-27.7pp vs sector) narrow to operating margins of -1% (-2.3pp vs sector) and net margins of -1.9%, yielding a gross-to-net conversion rate of -13%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $4.09, CPI AEROSTRUCTURES INC is trading at a premium to fundamental value. Our value factor score of 25/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The premium valuation implies the market is pricing in significant future growth or quality improvements that are not yet fully reflected in current fundamentals.

The stock currently trades at a P/E of 44.0x (a 98% premium to the sector median of 22.3x), EV/EBITDA of 964.4x (at a premium), P/B of 2.1x, P/S of 0.8x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis partially supports given strong quality metrics.

We assign a High uncertainty rating to CPI AEROSTRUCTURES INC. Key risk factors include significant leverage (196% debt-to-equity), current negative profitability (net margin -1.9%), elevated valuation multiple (P/E 44.0x) that leaves limited margin for error. The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: significant leverage (196% debt-to-equity); current negative profitability (net margin -1.9%); elevated valuation multiple (P/E 44.0x) that leaves limited margin for error; the combination of leverage (196% D/E) and thin margins (-1.9% net) amplifies downside risk. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 61th percentile and quality factor at the 64th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: above-average stability (61th percentile) suggests predictable business dynamics. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate CPI AEROSTRUCTURES INC's capital allocation as Poor. Key concerns include low returns on equity (-3.1%), elevated leverage (196% D/E), negative profitability, weak asset returns (ROA -1.1%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — CPI AEROSTRUCTURES INC significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, CPI AEROSTRUCTURES INC receives a Hold rating with a composite score of 54.1/100 (rank #1382 of 7,333). Our quantitative framework assigns a No Moat (23/100, trend: stable), High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 48/100.

Our analysis supports a neutral stance on CPI AEROSTRUCTURES INC. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.