$12.39
$42.49
bear $12.39
base $34.75
bull $42.49
margin of safety $16.00
market price* $65.01
BK Technologies designs and sells land-mobile radios for first responders and government agencies: the BKR5000 portable (2020), the all-band BKR9000 portable (launched April 2023) and the older KNG line, plus software services such as InteropONE and LocateONE. An all-band BKR9500 mobile radio is in development. Manufacturing is outsourced. Sales were $86.1 million in 2025; U.S. federal agencies took about 29% (38% in 2024), and the rest goes to state and local public-safety agencies and dealers. Motorola Solutions dominates the market. How we measure earnings. We use the cash the business generates for owners: operating cash flow, less swings in working capital, less stock-based pay (a real cost), less the capital spending needed to stay in business. That includes the radio development spending the company now capitalizes ($1.3 million in 2024, $2.1 million in 2025 for the BKR9500), which we count as a cost. Per-share figures before the April 2023 one-for-five reverse split are restated. Owner earnings per share: 2016 $1.68, 2017 -$2.23, 2018 $0.79, 2019 -$2.07, 2020 $0.64, 2021 -$0.54, 2022 -$3.31, 2023 -$0.13, 2024 $1.50, 2025 $3.81. Before the BKR line and outsourced manufacturing were both in place, this was a business that lost money in most years. We measure the current business from 2024 onward. The company has no borrowings, so there is no interest to add back. Starting point, about $3.30 per share. The 2024-2025 midpoint is about $2.66, but 2024 was a transition year with gross margin of 37.9% against 48.8% in 2025, and the first half of 2026 confirms the higher margin: revenue up 11% to $44.7 million, gross margin about 52% in both quarters, operating cash flow $7.5 million versus $6.0 million a year earlier. Built from first-half results (net income $5.9 million plus depreciation, deferred tax and inventory charges, less stock pay, equipment and capitalized development), the business is generating roughly $6 million of owner earnings a half on about 4.04 million diluted shares, and the second half has historically been the stronger one (in 2025 it produced well over half of net income). Against that, engineering spending jumped (second-quarter research and development $4.0 million versus $2.3 million a year earlier), and 2025 was helped by using up deferred tax assets, which fell from $7.8 million to $6.6 million and will be gone within a few years, after which cash taxes rise. We therefore start at $3.30, below 2025's $3.81. Growth check: owner earnings per share rose about 154% in 2025; the first year of the base case assumes a decline of about 13%, so no reversal needs explaining. What we credit and what we leave out. No growth is credited in any case. Growth here depends on new radio products, share gains against Motorola and government budgets; none is contracted or a long-repeated process, and backlog fell to $14.2 million at the end of 2025 from $21.8 million. The BKR9500 has not yet sold, so it is left out. What we credit is that the current earnings level continues while the current product generation stays competitive; the company has replaced its radio line roughly every three to five years since 2011, but it has only earned money on the current line, so earnings fade after year 10 rather than continuing indefinitely. Base case, about $34.75 per share. Cash flow of $3.30 a share for four years, then $3.00 once the remaining tax assets are used up, held through year 10, then fading to zero over the following ten years as this product generation ages without a proven successor. The business is worth about $29.82 a share, plus about $4.93 a share of cash beyond the roughly $10 million we assume it needs to run inventory and payables ($29.9 million of cash at June 30, 2026). It owes nothing, so equity is worth the full $34.75. Bear case, about $12.39 per share. One more good year, then a downturn of the kind this company has actually had: in 2017 revenue fell 22% and in 2019 it fell 19% as federal and state orders paused, and owner earnings swung to about -$2 a share each time. We model two loss years (-$1.50 and -$1.00 a share), after which gross margin settles back near the 2024 level of about 38% as tariffs on imported components and pricing pressure bite, leaving about $1.20 a share through year 10 and fading to zero over five years with no successful next product. Business value about $7.46 a share plus $4.93 of excess cash; no debt, so $12.39. The cash pile covers the loss years; the company's $6 million Fifth Third credit line (renewed October 2025, undrawn) is not needed to survive this case. Bull case, about $42.49 per share. Margins and the higher spending base both hold and the 2025 level is roughly sustained: $3.80 a share for four years, $3.50 through year 10, then a slower fade over fifteen years as the radio line is refreshed on its past cadence. Business value about $37.56 plus $4.93 of cash; no debt, so $42.49. A successful BKR9500 launch would sit above this, but it is not yet evidence. Stress test. We tried to break the starting level with the jump in engineering spending. First-half 2026 operating income was $7.1 million versus $6.9 million a year earlier despite research spending rising by $2.6 million, because gross profit rose $4.2 million; the higher cost base is already absorbed in our starting point. The margin itself held at about 52% through tariff disclosures. The weak spot is that only about two years of this margin structure exist. Margin of safety price, $16. We are fairly confident the business currently earns about $3 to $4 a share in cash, but not that it keeps doing so: this is a small company in a market dominated by one competitor, it has earned real money for only two years, and its own history shows 20% revenue drops and loss years when government orders pause. The balance sheet is the strongest protection: about $30 million of cash, no debt and no preferred stock, so a bad stretch hurts value but does not threaten survival. If we are wrong on the margin (back to 38%) and on the next product, the shares are worth roughly $12, much of it the cash. The company pays no dividend, so all return must come from the business itself; the price assumes a holding period of three to five years. From $16, the base case implies well above 20% a year over four years, and the bear case implies a loss of about a quarter, with the cash cushion limiting the damage. A higher price leaves too little room for a repeat of 2017 or 2019. What changed since our last review (late September 2026). The business facts are the same; on a closer reading of first-half 2026 cash flow, gross profit growth more than covered the rise in engineering spending, so we lifted the starting level from $2.70 to $3.30 a share. We also modeled the bear case directly on the company's own 2017 and 2019 order downturns rather than on a gradual margin slip. The margin of safety price moves to $16 from $17 because the downturn the bear case now carries is deeper in the early years. What would make this wrong. Upside: the BKR9500 or another new product adding sales at current margins, or engineering spending leveling off. Downside: loss of federal or state contracts, a fall in gross margin, or another order pause like 2017 and 2019 lasting longer than two years.