TAYD

We rate TAYLOR DEVICES, INC. (TAYD) as a Buy with a composite score of 68.1/100 at a current price of $87.89. The stock scores above average across the majority of our six quantitative factors and ranks #149 out of 7,333 stocks in our universe, reflecting a favorable risk-reward profile.

The rating is primarily driven by strength in momentum (88th percentile) and value (75th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (24th percentile) and quality (66th percentile) tempers our overall conviction. We assign a No Moat rating (38/100), Low uncertainty, and Standard capital allocation.

Key items to watch: whether strong momentum is fundamentally supported by revenue trends. 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.

TAYLOR DEVICES, 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 68.1/100 places it at rank #149 in our full 7,333-stock universe. At $157M in market capitalization, TAYLOR DEVICES, INC. is a small-cap player in the Manufacturing space, which limits certain scale advantages but may allow for more agile strategic execution.

Despite positive momentum (88th percentile), revenue contraction of -0% creates a divergence between price action and fundamental trajectory. This divergence suggests either that the market is looking through near-term weakness or that technical factors are temporarily inflating the stock. Investors should assess whether the revenue decline reflects cyclical weakness or structural challenges.

The margin cascade tells an important story: gross margins of 45% (+2.5pp vs sector) narrow to operating margins of 18% (+16.7pp vs sector) and net margins of 17.7%, yielding a gross-to-net conversion rate of 39%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $87.89, TAYLOR DEVICES, INC. appears undervalued relative to its fundamentals. Our value factor score of 75/100 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 stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 39.1x (a 76% premium to the sector median of 22.3x), EV/EBITDA of 38.1x (at a premium), P/B of 4.2x, P/S of 7.0x. 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 Low uncertainty rating to TAYLOR DEVICES, INC.. The company exhibits strong financial stability with a beta of 0.71, conservative leverage (9% D/E), and a stability factor in the 71th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

We identify no major risk factors at this time. The company's stability factor sits at the 71th percentile with quality at the 66th percentile, both of which support our low-risk assessment. The absence of material leverage, profitability, or volatility concerns reduces the likelihood of a permanent capital loss scenario.

Key risk mitigants include: healthy gross margins of 45% provide a buffer against cost pressures; conservative leverage (9% D/E) limits balance sheet risk; above-average stability (71th 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 is favorable for long-term investors.

We rate TAYLOR DEVICES, INC.'s capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 10.8%, and the balance sheet is managed within acceptable parameters (D/E: 9%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; TAYLOR DEVICES, INC. falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. Absent a dividend, the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, TAYLOR DEVICES, INC. receives a Buy rating with a composite score of 68.1/100 (rank #149 of 7,333). Our quantitative framework assigns a No Moat (38/100, trend: stable), Low uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 65/100.

Our analysis supports a constructive view on TAYLOR DEVICES, INC.. The combination of the current valuation, low uncertainty, and standard capital allocation creates a risk-reward profile that favors accumulation at current levels. We recommend investors consider adding this name to portfolios aligned with the stock's risk profile.