By Dan Victor
Cadre Holdings stock is down 32% since we recommended it in March.
After a record-breaking year in 2025 with solid growth and profitability for the tactical duty gear manufacturer, a set of underwhelming quarterly earnings in recent months have sent shares sharply lower. Despite the volatility, we think Cadre is still worth holding and positioned to rebound into the second half of 2026.
Earlier this month, the company reported first quarter results with sales of $155 million, up 19% year over year and slightly ahead of Wall Street expectations. Earnings per share came in at $0.05, missing the consensus estimate of $0.07 and down from $0.23 in the prior year quarter. Management cited higher acquisitions-related costs and an unfavorable product mix including softness in the nuclear business, which drove the gross margin down from 43.1% last year to 38.7%.
Business has been lumpy dating to the government shutdown that delayed certain shipments. Another challenge stems from a decision by the U.S. Department of Energy to temporarily suspend the plutonium down-blending program, an initiative that dilutes surplus weapons-grade plutonium for safe disposal. Cadre's specialized products for handling sensitive radioactive materials are critical to the program. Management views the development as simply a delay, or "timing shift," given regulatory obligations to complete these nuclear life cycle cleanups.
We agree with this optimistic assessment and expect coming quarters to demonstrate an improved operating backdrop. Cadre's acquisitions in the nuclear safety market since 2024, including Alpha Safety and Carr's Engineering, position it to capture significant growth opportunities beyond environmental cleanup in both nuclear energy production and national security environments.
The highlight from the earnings report was Cadre's massive and growing backlog, which reached $355 million, surging from $189 million at the end of 2025. The bulk of the increase is related to two contracts awarded by a European subsidiary of General Dynamics totaling $86 million for blast attenuation seats in the Mowag EAGLE V vehicle platform. Underlying these new orders is a secular shift to increased military spending, especially in Europe.
The company also cited strong demand for its broader lineup of duty gear and armor from law enforcement and military applications. The ability to fulfill these orders points to revenue and earnings tailwinds over the next several quarters. As explained by Cadre CEO Warren Kanders during the last earnings conference call, "We are confident in Cadre's long-term outlook and remain focused on taking advantage of both organic and inorganic opportunities supported by a strong balance sheet, robust acquisition pipeline and the continued implementation of our operating model."
Cadre has reiterated full-year guidance, targeting net sales between $736 million and $758 million. That represents 20% annual growth fueled by acquisitions and the organic momentum. The company also expects full year adjusted earnings before interest, taxes, depreciation, and amortization, or Ebitda, between $136 million and $141 million, which would mark a 22% at the midpoint compared with 2025.
The upside to the selloff is that the stock now looks like a bargain. Trading at 12 times Ebitda, Cadre sits at a meaningful discount to its average multiple closer to 15x the past three years, with a case to be made that the long term outlook is as strong as ever.
Key monitoring points for investors over coming quarters include signs of backlog conversion into revenue, margin recovery as the product mix normalizes, and updates on DOE nuclear funding resumption. Progress on the integration of the recent acquisitions and demand for explosive ordnance disposal opportunities in the Middle East will also be important. The main risk is the possibility that execution missteps leading to disappointing earnings could keep shares volatile. For better or worse, Cadre remains exposed to broader sentiment surrounding the defense sector.
Several Wall Street analysts have reaffirmed buy ratings on the stock with an average target price of $47, according to FactSet.
Overall, Cadre's record backlog and key role as a mission-critical supplier of protective safety equipment with an expanding and diversified portfolio of products make the stock a compelling buy-the-dip opportunity for long-term investors.
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May 23, 2026 01:58 ET (05:58 GMT)
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