Innovative Solutions and Support, Inc. (ISSC): A Bull Case Theory

We came across a bullish thesis on Innovative Solutions and Support, Inc. (ISSC) on Substack by Maksim. In this article, we will summarize the bulls’ thesis on ISSC. Innovative Solutions and Support, Inc. (ISSC)’s share was trading at $10.82 as of May 19^th. ISSC’s trailing P/E was 17.74 according to Yahoo Finance.

Innovative Solutions & Support (ISSC) reported exceptional Q2 2025 results, far exceeding expectations due to strong momentum in new military programs, the integration of Honeywell’s military product line, and ongoing recovery in the air transport market. Revenue surged 104% year-over-year to $21.9 million, with gross profit doubling to $11.3 million and margins remaining healthy at 51.4%. Net income soared 340% to $5.3 million, or $0.30 per share, while adjusted EBITDA jumped 219% to $7.7 million. Operating expenses rose modestly to $4.3 million despite the revenue spike, benefiting from a favorable sales mix weighted toward military programs, which, although lower in gross margin, yield strong EBITDA margins.

The company maintains a robust $80 million backlog and reiterated confidence in achieving over 30% annual growth in both revenue and EBITDA. Key initiatives remain on track, including the completed implementation of a new ERP system compliant with DoD requirements, a facility expansion that will more than triple production capacity by mid-year, and the smooth integration of Honeywell’s F-16 product line. ISSC manufactures all its products in the U.S., positioning it well amid trade uncertainty and reshoring trends. Management is actively evaluating acquisitions, particularly of smaller avionics firms or foreign targets with outsourced production that can be relocated to ISSC’s domestic facilities.

While Q2 results were partially boosted by accelerated shipments ahead of Honeywell’s production transition, similar dynamics may repeat in Q3. Though Q4 visibility remains dependent on supply chain execution, the long-term outlook remains strong, with multiple tailwinds supporting continued growth and operational leverage. Curious how Boeing on of its key customers performs? Check out this Boeing breakdown worth reading.

Innovative Solutions and Support, Inc. (ISSC) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 10 hedge fund portfolios held ISSC at the end of the fourth quarter which was 6 in the previous quarter. While we acknowledge the risk and potential of ISSC as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ISSC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.