RAL: Solid 1Q26 7c/11% Operating Beat; Boosts 2026 11% Above and 2Q 16% Above; Ups Cost-Out

研报英文原文证据摘录

RAL: Solid 1Q26 7c/11% Operating Beat; Boosts 2026 11% Above and 2Q 16% Above; Ups Cost-Out

ant operational improvement from Ralliant, rebounding from the disappointments last quarter.

We like seeing the company capitalizing on the secularly growing A&D and other electronics markets, while committing to higher

annualized cost savings targets through 2028 to achieve its normalized low-to-mid 20s EBITDA margin by 2028.

Potential stock reaction. Heading into the results, RAL shares have outperformed its SMID-cap peers by 570 bps over the past

three weeks (but has underperformed peers by 12.7ppts year-to-date) and is trading near the high-end of its target relative P/E

range to peers. Weighing the solid operating beat, guidance boost, upside 2Q26 outlook, and higher cost savings target through

2028, we would not be surprised to see a HSD% relative outperformance today.

Reports solid 1Q26 operating beat of 7c/11% vs. our estimates on better organic sales and margins at both segments. Ralliant’s

1Q26 organic sales grew 8.8% Y/Y, better than our 3.8% estimate, 5.2% consensus, and guidance for 3%-6%. By segment, Test &

Measurement grew 8.7% vs. our 2.0% estimate and consensus at 3.5%. Sensors & Safety Systems grew 8.8%, also nicely above our

5.0% estimate and 6.3% consensus. By end market, A&D grew 21%, Communications grew 14%, and Diversified Electronics grew

13%. Semiconductor declined -8%, as-expected due to a non-recurring customer project. Total company EBITDA margin expanded

270 bps Y/Y to 18.6%, above our 17.6% estimate, 17.8% consensus, and guidance for 17%-18%, with T&M margin expanding 700

bps to 11.9% vs. our 7.4% estimate and S&SS margin expanding 70 bps to 28.4% vs. our 28.1% estimate. Incremental margins

were strong at 43%.