Commercial lighting and retail display solutions provider LSI (NASDAQ: LYTS) beat Wall Street’s revenue expectations in Q4 CY2025, but sales were flat year on year at $147 million. Its non-GAAP profit of $0.26 per share was 20.9% above analysts’ consensus estimates.
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LSI (LYTS) Q4 CY2025 Highlights:
- Revenue: $147 million vs analyst estimates of $140.1 million (flat year on year, 4.9% beat)
- Adjusted EPS: $0.26 vs analyst estimates of $0.22 (20.9% beat)
- Adjusted EBITDA: $13.36 million vs analyst estimates of $12.42 million (9.1% margin, 7.6% beat)
- Operating Margin: 6%, in line with the same quarter last year
- Free Cash Flow Margin: 15.9%, up from 6% in the same quarter last year
- Market Capitalization: $612 million
“The strength of our diversified, solutions-based model was evident in the second quarter, enabling LSI to deliver solid performance despite a challenging prior-year comparison,” stated James A. Clark, President and Chief Executive Officer of LSI.
Company Overview
Enhancing commercial environments, LSI (NASDAQ: LYTS) provides lighting and display solutions for businesses and retailers.
Revenue Growth
A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Thankfully, LSI’s 16.1% annualized revenue growth over the last five years was incredible. Its growth beat the average industrials company and shows its offerings resonate with customers, a helpful starting point for our analysis.
We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. LSI’s annualized revenue growth of 11.8% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. 
This quarter, LSI’s $147 million of revenue was flat year on year but beat Wall Street’s estimates by 4.9%.
Looking ahead, sell-side analysts expect revenue to grow 3.9% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and indicates its products and services will see some demand headwinds. At least the company is tracking well in other measures of financial health.
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Operating Margin
LSI was profitable over the last five years but held back by its large cost base. Its average operating margin of 6.4% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.
On the plus side, LSI’s operating margin rose by 2.8 percentage points over the last five years, as its sales growth gave it operating leverage.
This quarter, LSI generated an operating margin profit margin of 6%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
LSI’s EPS grew at an astounding 45% compounded annual growth rate over the last five years, higher than its 16.1% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
We can take a deeper look into LSI’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, LSI’s operating margin was flat this quarter but expanded by 2.8 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.
Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.
For LSI, its two-year annual EPS growth of 5.9% was lower than its five-year trend. This wasn’t great, but at least the company was successful in other measures of financial health.
In Q4, LSI reported adjusted EPS of $0.26, in line with the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects LSI’s full-year EPS of $1.11 to grow 19.4%.
Key Takeaways from LSI’s Q4 Results
We were impressed by how significantly LSI blew past analysts’ EBITDA expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a good print with some key areas of upside. The stock remained flat at $20.38 immediately following the results.
Is LSI an attractive investment opportunity right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).
