KOPN

We rate KOPIN CORP (KOPN) as a Hold with a composite score of 50.6/100 at a current price of $2.17. 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 (65th percentile) and value (64th percentile), which together account for the majority of the composite score. Offsetting weakness in stability (28th percentile) and investment (34th percentile) tempers our overall conviction. We assign a Narrow Moat rating (41/100), Very High uncertainty, and Poor capital allocation.

Key items to watch: balance sheet deleveraging progress. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is narrowing, which raises the risk of a future downgrade if the trend persists.

KOPIN CORP 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 50.6/100 places it at rank #1913 in our full 7,333-stock universe. At $371M in market capitalization, KOPIN CORP 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 -70% combined with momentum at the 60th 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 100% (+57.5pp vs sector) narrow to operating margins of 968% (+966.8pp vs sector) and net margins of 868.3%, yielding a gross-to-net conversion rate of 868%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $2.17, KOPIN CORP is trading near fair value based on current fundamentals. Our value factor score of 64/100 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. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 107.5x (a 383% premium to the sector median of 22.3x), EV/EBITDA of 21.4x (at a premium), P/B of 18.9x, P/S of 28.4x. 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 Very High uncertainty rating to KOPIN CORP. The stock exhibits multiple compounding risk factors: elevated market sensitivity (beta of 2.56), significant leverage (187% debt-to-equity), below-average price stability (28th percentile). The extreme uncertainty around future cash flows makes precise valuation difficult, and the range of outcomes is exceptionally wide. Only investors with high risk tolerance and extended time horizons should consider this name.

Specific risk factors that inform our assessment include: elevated market sensitivity (beta of 2.56); significant leverage (187% debt-to-equity); below-average price stability (28th percentile); elevated valuation multiple (P/E 107.5x) that leaves limited margin for error. 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 28th percentile and quality factor at the 65th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 100% provide a buffer against cost pressures. 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 KOPIN CORP's capital allocation as Poor. Key concerns include low returns on equity (-35.9%), elevated leverage (187% D/E), weak asset returns (ROA -12.5%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — KOPIN CORP 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, KOPIN CORP receives a Hold rating with a composite score of 50.6/100 (rank #1913 of 7,333). Our quantitative framework assigns a Narrow Moat (41/100, trend: narrowing), Very High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 50/100.

Our analysis supports a neutral stance on KOPIN CORP. 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.