Latest Ratios: P/E Ratio 42.8x · EV/EBITDA 12.3x · ROE 4.1%. (2025–2025 historical series)
Price-based multiples — how expensive the stock is relative to earnings, sales, book value, and cash flow
| Metric | TTM | FY 2025 |
|---|---|---|
| Market Cap | $2.2B | $2.0B |
| Enterprise Value | $2.2B | $2.0B |
| P/E Ratio → | 42.80 | 37.40 |
| P/S Ratio | 2.29 | 2.06 |
| P/B Ratio | 1.76 | 1.54 |
| P/FCF | 46.27 | 41.67 |
| P/OCF | 34.98 | 31.50 |
P/E links to full P/E history page with 30-year chart
Enterprise-value multiples — capital-structure-neutral measures of total business value
| Metric | TTM | FY 2025 |
|---|---|---|
| EV / Revenue | — | 2.02 |
| EV / EBITDA | 12.33 | 11.08 |
| EV / EBIT | 18.87 | 21.72 |
| EV / FCF | — | 40.86 |
Margins and return-on-capital ratios measuring operating efficiency
Full margin charts and quarterly trend are on the Earnings History page
| Metric | TTM | FY 2025 |
|---|---|---|
| Gross Margin | 41.6% | 41.6% |
| Operating Margin | 11.9% | 11.9% |
| Net Profit Margin | 5.5% | 5.5% |
| Metric | TTM | FY 2025 |
|---|---|---|
| ROE | 4.1% | 4.1% |
| ROA | 3.0% | 3.0% |
| ROIC | 6.9% | 6.9% |
| ROCE | 7.3% | 7.3% |
Solvency and debt-coverage ratios — lower is generally safer
| Metric | TTM | FY 2025 |
|---|---|---|
| Debt / Equity | 0.26 | 0.26 |
| Debt / EBITDA | 1.91 | 1.91 |
| Net Debt / Equity | — | -0.03 |
| Net Debt / EBITDA | -0.22 | -0.22 |
| Debt / FCF | — | -0.81 |
| Interest Coverage | 4.24 | 4.24 |
Net cash position: cash ($381M) exceeds total debt ($342M)
Short-term solvency ratios and asset-utilisation metrics
| Metric | TTM | FY 2025 |
|---|---|---|
| Current Ratio | 3.69 | 3.69 |
| Quick Ratio | 2.80 | 2.80 |
| Cash Ratio | 1.79 | 1.79 |
| Asset Turnover | — | 0.54 |
| Inventory Turnover | 3.04 | 3.04 |
| Days Sales Outstanding | — | 68.82 |
Earnings, FCF, buyback, and dividend yields — total returns to shareholders
Full dividend history and growth charts are on the Dividend History page
| Metric | TTM | FY 2025 |
|---|---|---|
| Dividend Yield | — | — |
| Payout Ratio | — | — |
| Metric | TTM | FY 2025 |
|---|---|---|
| Earnings Yield | 2.3% | 2.7% |
| FCF Yield | 2.2% | 2.4% |
| Buyback Yield | 1.8% | 1.9% |
| Total Shareholder Yield | 1.8% | 1.9% |
| Shares Outstanding | — | $37M |
Includes 30+ ratios · 1 years · Updated daily
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Quick answers to the most common questions about buying NOVTU stock.
Novanta Inc. Tangible Equity Units's current P/E ratio is 42.8x. The historical average is 37.4x. This places it at the 100th percentile of its historical range.
Novanta Inc. Tangible Equity Units's current EV/EBITDA is 12.3x. This enterprise value multiple compares the company's total value (equity + debt - cash) to its EBITDA. The historical average is 11.1x.
Novanta Inc. Tangible Equity Units's return on equity (ROE) is 4.1%. The historical average is 4.1%.
Based on historical data, Novanta Inc. Tangible Equity Units is trading at a P/E of 42.8x. This is at the 100th percentile of its historical P/E range. Compare with industry peers and growth rates for a complete picture.
Novanta Inc. Tangible Equity Units has 41.6% gross margin and 11.9% operating margin. Operating margin between 10-20% is typical for established companies.
Novanta Inc. Tangible Equity Units's Debt/EBITDA ratio is 1.9x, indicating moderate leverage. A ratio below 2x is generally considered financially healthy.
Key Metrics
Top Statement Risk
Valuation disconnect from current earnings
Growth Premium vs. Near-Term Earnings Power
NOVTU trades at a P/E of 40.76 but a Forward P/E of just 16.69, suggesting the market is pricing in a significant near-term earnings inflection that is not yet reflected in trailing twelve-month profitability.
The valuation spread implies a market expectation that Novanta's normalized earnings power is substantially higher than recent results, as the Forward P/E is less than half the TTM multiple. This disconnect warrants scrutiny of whether the earnings ramp-up is driven by operational improvements or one-time factors like favorable working capital swings noted in prior analysis. The EV/EBITDA of 11.73 is more aligned with the Forward P/E, indicating that EBITDA is a closer proxy for the company's sustainable cash earnings than net income.
Margin Recovery Masks Volatile Core Earning Power
Operating margin has expanded to 11.5% in 2026Q2 from a low of 6.2% in 2025Q2, but this improvement coincides with a sharp decline in R&D intensity, suggesting a potential near-term trade-off between profitability and long-term innovation capacity.
The gross margin recovery to 43.1% is encouraging, yet remains below the peak of 44.8% seen in 2025Q3, indicating limited pricing power or ongoing cost pressures. The net margin of 4.7% significantly trails the operating margin, highlighting the dilutive impact of stock-based compensation, which prior analysis found to equal 78% of net income. Investors should monitor whether the operating margin expansion is sustainable or relies on cost-cutting that could impair future growth.
Low and Declining Returns on Invested Capital
ROIC has declined from a recent peak of 2.2% in 2025Q1 to just 1.9% in 2026Q2, a trend that fundamentally questions the efficiency of the company's capital allocation despite a strong balance sheet and revenue growth.
The falling ROIC is particularly notable as it occurs alongside a massive reduction in leverage and a large cash accumulation, which should theoretically improve returns on a smaller equity base. This suggests the issue is operational: asset turnover remains very low at 0.13, indicating the expanded asset base, including goodwill from acquisitions, is not yet generating proportionate profits. The company appears to be in a period of post-integration or investment where returns are temporarily depressed.
Deleveraging Creates Strategic Financial Flexibility
Novanta's D/E ratio has collapsed from 0.64 to 0.18 in a year, and interest coverage has surged to 27.63x, indicating the firm has successfully prioritized balance sheet strength and now holds ample capacity for future strategic moves.
The aggressive debt reduction, coupled with the accumulation of $718.6 million in cash, has transformed the company's financial risk profile. The current leverage metrics suggest minimal refinancing risk and provide significant flexibility for acquisitions, R&D reinvestment, or returning capital to shareholders. However, this conservative stance also means the company is not utilizing cheap debt to potentially enhance returns on equity for shareholders.
Volatile Working Capital Cycle Drives Cash Flow Swings
The cash conversion cycle has swung wildly from 120 days to 435 days over the past six quarters, indicating that working capital management, not core operations, is the primary driver of quarterly cash flow volatility.
The dramatic improvement in CCC from 435 days in 2025Q1 to 120 days in recent quarters has been a major contributor to the surge in operating cash flow. This volatility appears driven by large swings in Days Sales Outstanding (from 257 to 63) and Days Inventory Outstanding (from 411 to 116), which may reflect lumpy project-based deliveries or inconsistent collection patterns. This makes it challenging to predict underlying cash generation from operations based on headline cash flow figures.
Misapplication of P/E Based on TTM Results
The most commonly misapplied ratio is the trailing twelve-month P/E of 40.76, which is misleading because it includes a period of depressed earnings, while the Forward P/E of 16.69 suggests a very different valuation narrative.
Using the TTM P/E of 40.76 would imply Novanta is highly valued relative to peers like MKS (61.89) or IPG Photonics (98.26), but this comparison is flawed. The TTM figure is inflated by anomalous low-profit quarters and does not reflect the current earnings trajectory or the significant cash accumulation on the balance sheet. Analysts and investors should instead use the Forward P/E or EV/EBITDA multiples, which better incorporate the recent operational improvements and the company's enhanced financial flexibility.