3/8/25
Exponent, Inc. (EXPO) is not your typical dividend stock, but that doesn’t mean income investors should overlook it. This company operates in the niche world of engineering and scientific consulting, helping businesses solve complex technical problems. While it doesn’t offer a high dividend yield, EXPO has a strong track record of growth, financial stability, and consistent dividend payments. Investors looking for a stock that balances moderate income with long-term appreciation may find EXPO to be a compelling option.
Key Dividend Metrics
📈 Dividend Yield: 1.40%
💵 Annual Dividend: $1.20 per share
🕰 5-Year Average Dividend Yield: 0.98%
🎯 Payout Ratio: 53.08%
📆 Ex-Dividend Date: March 7, 2025
💰 Next Payment Date: March 21, 2025
Dividend Overview
Exponent isn’t known for having a high-yielding dividend, but it has been a steady dividend payer. Right now, its 1.40% yield is actually higher than its five-year average of 0.98%, which means investors are getting a slightly better income return than usual.
The company’s payout ratio sits at 53.08%, a comfortable range that allows EXPO to reward shareholders while still keeping plenty of cash for reinvestment. This suggests the dividend is not only secure but has room for future increases.
For those looking for a high-yield stock, EXPO might not be the best option. But for investors focused on stability and growth, this is a company that has proven it can steadily return cash to shareholders over time.
Dividend Growth and Safety
Exponent has been increasing its dividend regularly, reinforcing its commitment to shareholders. It’s not just about paying a dividend—it’s about growing it, and EXPO has done a solid job in that regard.
One of the key factors in dividend safety is earnings growth, and EXPO’s numbers look strong. The company posted a 12.7% year-over-year earnings increase, and with a payout ratio just above 50%, the dividend doesn’t appear at risk.
Another major factor is cash flow, and here EXPO shines. The company generated $144.54 million in operating cash flow and $107.3 million in free cash flow over the last year. Those numbers show that EXPO has plenty of liquidity to cover its dividend and reinvest in the business.
On the balance sheet side, EXPO keeps things conservative. The debt-to-equity ratio is just 19.35%, which is relatively low, and the current ratio of 2.74 indicates the company has more than enough assets to cover short-term liabilities. These are all signs that EXPO’s dividend is safe and could continue growing.
Chart Analysis
The chart for Exponent, Inc. (EXPO) reveals some notable trends that can help investors understand the stock’s current momentum, potential support levels, and overall sentiment in the market.
Price Movement and Trend
EXPO saw a strong uptrend for most of last year, with the stock climbing to a peak above $110. However, after reaching those highs, the price experienced a significant downturn. The stock has been in a downtrend since late last year, consistently making lower highs and lower lows.
Right now, the price sits at $85.54, which is closer to its recent lows than its highs. The stock attempted to bounce off the $77-80 range but is still struggling to reclaim lost ground.
Moving Averages
The 50-day moving average has been trending downward for several months and remains below the 200-day moving average, which is also flattening out. This setup, often referred to as a “death cross,” typically signals continued weakness or a bearish phase.
For EXPO to show real signs of recovery, it would need to reclaim the 50-day moving average and sustain a move above it. Right now, the stock is trading below both key moving averages, which suggests bearish momentum is still in control.
Volume Analysis
Trading volume has been mixed, with occasional spikes on both up and down days. There have been some large green volume bars, indicating buyers have stepped in at times, but they haven’t been strong enough to reverse the overall trend.
The most recent volume spikes appear on down days, suggesting more aggressive selling pressure. For a true reversal, EXPO would need to see an increase in volume on up days, confirming buyers are regaining control.
Relative Strength Index (RSI)
The RSI indicator has been in oversold territory for a while, but it’s starting to show signs of a potential rebound. Historically, when RSI drops below 30 and then begins to recover, it can indicate a possible shift in momentum. However, RSI alone isn’t enough to confirm a reversal—there needs to be confirmation from price action and volume.
Recent Candlestick Patterns
Looking at the last few candles, there are signs of some buying interest, but the wicks on recent candles show that sellers are still active at higher prices. A few candles have long lower wicks, which suggests buyers stepped in to push the price back up, but follow-through has been weak.
If the next few trading sessions produce stronger green candles with solid volume, it could be an early sign of a trend shift. However, if the stock struggles to break above key resistance levels, it may continue to drift lower.
Analyst Ratings
📊 Recent analyst updates for Exponent, Inc. (EXPO) reflect mixed sentiment, with both upgrades and downgrades shaping the market’s view on the stock.
🔼 Upgrades
📈 Truist Securities increased its price target on EXPO from $100 to $120 while maintaining a buy rating. Analysts cited strong financial performance, consistent revenue growth, and resilience in the company’s consulting services. They see Exponent as a high-quality business that is well-positioned to weather market fluctuations.
📊 UBS also adjusted its price target, moving it from $88 to $110, while maintaining a neutral rating. While not as bullish as Truist, their outlook became more optimistic, citing the company’s strong balance sheet and disciplined approach to capital allocation.
🔽 Downgrades
⚠️ Morgan Stanley lowered its price target on EXPO from $105 to $90, expressing concerns over the company’s valuation following its recent run-up. Analysts believe the stock is trading at a premium compared to its historical averages and see potential headwinds in the form of slowing consulting demand in certain sectors.
📉 Bank of America shifted its stance from buy to neutral, citing concerns about margin pressures and increased competition in the scientific consulting space. They see long-term potential in EXPO but believe short-term earnings growth could be weaker than expected.
🎯 Consensus Price Target
💰 The current consensus price target for EXPO stands at $116, reflecting a generally positive outlook among analysts despite some valuation concerns.
While opinions are divided, the balance of upgrades and downgrades suggests that investors should carefully assess the stock’s premium valuation against its steady financial performance.
Earnings Report Summary
Exponent, Inc. wrapped up its most recent quarter with solid numbers, showing steady growth and a strong financial position. The company continues to perform well in its niche consulting space, with increasing demand across key industries.
Fourth Quarter Highlights
Revenue came in at $136.8 million, an 11.3 percent jump compared to the same quarter last year. Even after removing reimbursable expenses, core revenue still climbed 8.7 percent to $123.8 million. The bottom line also looked healthy, with net income reaching $23.6 million or $0.46 per share, up from $20.9 million or $0.41 per share a year ago.
One of the standout improvements was Exponent’s tax rate, which dropped to 24.7 percent from 30.4 percent the year before. That helped boost earnings even further. Meanwhile, EBITDA (a key measure of profitability) landed at $31.2 million, making up 25.2 percent of core revenue—a solid margin for a consulting firm.
Full-Year Performance
Looking at the bigger picture, Exponent finished the full 2024 fiscal year with total revenue of $558.5 million, up 4.1 percent from last year. Core revenue (before reimbursements) also grew 4.3 percent, coming in at $518.5 million.
Net income for the year hit $109 million, translating to $2.11 per share, compared to $100.3 million and $1.94 per share in 2023. Margins held steady, and EBITDA for the full year reached $147.1 million, a slight improvement from the previous year.
What’s Driving Growth?
Exponent’s engineering and scientific consulting division, which makes up the bulk of its revenue, saw an 8 percent increase in business, thanks to rising demand from consumer product companies and utilities. Meanwhile, its environmental and health consulting arm, which represents a smaller portion of revenue, grew 11 percent, fueled by a pickup in the chemicals industry.
Utilization rates—how efficiently the company is using its workforce—stood at 73 percent, showing that Exponent is making good use of its team without stretching too thin.
Dividend Boost and Future Outlook
In a nod to investors, Exponent raised its quarterly dividend from $0.28 to $0.30 per share, keeping up its steady track record of returning cash to shareholders. That next payout is set for March 21, 2025.
The company remains in excellent financial shape, holding $258.9 million in cash with no signs of financial strain. Looking ahead, management expects modest revenue growth in 2025, with EBITDA margins staying in the 26 to 27 percent range. They also plan to increase headcount slightly each quarter to support demand.
All in all, Exponent continues to deliver stable results, proving that its niche consulting model remains in demand despite broader market uncertainties.
Financial Health and Stability
A company’s ability to sustain and grow its dividend largely depends on its financial strength. EXPO’s numbers indicate a solid foundation.
- Total Cash: $258.9 million
- Total Debt: $81.48 million
- Debt-to-Equity Ratio: 19.35%
- Return on Equity: 28.05%
With nearly three times as much cash as debt, EXPO has little financial risk. This flexibility allows the company to weather economic downturns, reinvest in its business, and keep rewarding shareholders.
The company also boasts a strong return on equity of 28.05%, showing that it efficiently uses investor capital to generate profits. Combine that with a 21.02% profit margin, and it’s clear that EXPO runs a profitable, well-managed operation.
Valuation and Stock Performance
- Current Price: $85.54
- 52-Week High: $115.75
- 52-Week Low: $77.21
- Trailing P/E Ratio: 40.56
- Forward P/E Ratio: 42.73
EXPO’s valuation leans on the expensive side, with a trailing price-to-earnings (P/E) ratio of 40.56 and a forward P/E of 42.73. That’s higher than the market average, which suggests investors are paying a premium for the company’s steady earnings growth and strong balance sheet.
The stock has pulled back significantly from its 52-week high of $115.75, currently trading closer to its 52-week low. This decline may present a more attractive entry point for long-term investors who believe in the company’s fundamentals.
Looking at technical indicators, the stock’s 50-day moving average sits at $89.15, while the 200-day moving average is at $98.63. This signals some recent downward momentum, but it also suggests the stock could be undervalued relative to its historical trading range.
Risks and Considerations
Even strong dividend stocks come with risks, and EXPO is no exception.
- Valuation Concerns: The stock trades at a premium valuation. If earnings growth slows, investors may see further price declines.
- Lower Dividend Yield: At 1.40%, the yield is not particularly high. Investors looking for significant income may find better opportunities elsewhere.
- Stock Performance: The recent downtrend suggests the stock could remain under pressure if market sentiment shifts or if earnings growth slows.
- Economic Sensitivity: EXPO’s consulting business is somewhat resilient, but a broader economic slowdown could impact client demand.
Despite these risks, EXPO’s financial strength and history of stable performance provide a solid foundation for long-term investors.
Final Thoughts
Exponent, Inc. is a unique dividend stock. It doesn’t offer a high yield, but it makes up for it with consistency, financial health, and steady growth. For investors who prioritize dividend safety over yield, EXPO remains an attractive option.
The stock’s recent pullback makes it a more interesting prospect, though the premium valuation is something to keep in mind. Overall, EXPO is a high-quality company with a well-managed dividend policy, making it a compelling option for those who value reliability in their income investments.
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