$23.64
$46.64
bear $23.64
base $38.55
bull $46.64
margin of safety $24.00
market price* $54.07
Taylor Devices (North Tonawanda, New York) engineers and builds shock-absorption, energy-dissipation and vibration-control hardware: Seismic Dampers and other structural damping devices for buildings and bridges, Fluidicshoks, crane and industrial buffers, liquid die springs, machined springs, vibration isolators and gas-charged custom actuators for aerospace and defense programs. In fiscal 2026 (year ended May 31, 2026) sales were $41.6 million, 66% aerospace/defense, 25% structural and 9% industrial, with 87% booked in the United States. Five customers took 45% of sales, and contracts with the federal government or its contractors are generally fixed-price and can be terminated at the government's election. What the business earns. Owner earnings (operating cash flow with working-capital swings removed, less stock-option cost and the capital spending needed to maintain the business) were $0.22 to $1.10 per share every year from fiscal 2017 to 2022, then $1.33 in 2023 and $2.70, $2.62 and $2.61 in 2024-2026. The step-up came with gross margin rising from 24-33% to 42-47%; the company attributes it to price increases that recovered material and labor costs, continuous-improvement work and higher volume, alongside a shift toward aerospace/defense work. Three accounting judgements matter. First, stock options are treated as a real cost; they have grown from about $0.15 million a year to $1.64 million in fiscal 2026. Second, about $1.6 million a year of interest earned on the company's roughly $41 million of short-term investments is taken out of the earnings stream, because that cash is counted separately below and counting both would double it. Third, fiscal 2026 tax was only 5% of pre-tax income, helped by a $0.93 million one-time benefit from option exercises; that benefit is not treated as recurring. On that basis the operating business earned about $1.17, $2.37, $2.28 and $1.93 per share in fiscal 2023-2026. We use $2.10 per share, the middle of those four years, as the normal earning power of the business as it is now; the years before 2023 describe a lower-margin business and are used in the bear case instead. Near-term path. Operating owner earnings per share fell about 3% in fiscal 2026, and the first quarter of fiscal 2027 (to August 31, 2026) was weak: sales of $7.3 million against $9.9 million a year earlier and net income of $0.46 million against $2.19 million. The base case therefore starts year one at $1.70, below the trailing rate. Against that, the order backlog at May 31, 2026 was $52.8 million (92% aerospace/defense) against $27.1 million a year earlier, and most of it is scheduled to ship in fiscal 2027, which supports a return to the normal level in year two. No growth beyond that is credited in the base case: the company has no record of steady unit or acquisition growth that would put growth in the bag. Base case: $1.70 in year one, $2.10 per share for years two through ten, then a fade over the following ten years to $1.40, a level between the old and new margin structures that a 70-year-old niche engineering franchise with 24 patents running to 2042 has shown it can sustain, held to year 40 and nothing after. The operating business is worth about $27.27 per share; the company owes no debt (its $10 million M&T Bank demand line was undrawn) and holds about $41.5 million of cash and short-term investments, of which we keep $4 million back as operating cash, adding about $11.27 per share. Base value: about $38.55 per share. Bull case: the business's own visible levers execute. The backlog includes a $19.0 million non-project order scheduled at $1.7 million in fiscal 2027, $5.0 million in 2028, $10.0 million in 2029 and $2.3 million in 2030; if that is additional to the normal run rate and earns fiscal-2024-type margins, earnings run about $2.30, $2.70, $3.10 and $2.60 per share in years one to four, then $2.50 through year ten, fading to $2.00 by year twenty and held to year 40. Business about $35.37 plus net cash $11.27, no debt: about $46.64 per share. Bear case: built from the company's own record. Year one at $1.20 as the soft first quarter extends, then a two-year downturn of the depth the company has actually had: fiscal 2018 (owner earnings $0.22 per share as gross margin fell to 24%) and fiscal 2021 (sales down a third from the fiscal 2019 peak, gross margin 14%, owner earnings $0.23). That gives $0.25 in years two and three, $0.70 in year four, then margins settle back toward the old structure at $1.10 per share (the ten-year middle of about $1.00, on today's larger sales base) through year ten, fading to $0.90 and ending after year 30. This also captures loss of a major customer or defense program, the concentration risk the filings name. Business about $12.37 plus net cash $11.27, no debt to carry: about $23.64 per share. Even this case leaves the balance sheet intact, because there are no borrowings. What could make this wrong: the higher margins of 2023-2026 are only three to four years old; if they prove to be a cycle peak rather than a reset in pricing, value moves toward the bear case. Earnings depend on a handful of customers and on government programs that can be cancelled. Structural sales follow construction and retrofit activity and fell 31% in fiscal 2026. Margin-of-safety price. We are moderately confident in the $2.10 earnings level: it is supported by three strong years and a record backlog, but the business never earned more than $1.10 a share before 2023 and the latest quarter was weak. The worst plausible outcome is a margin reversion combined with the loss of a large program, producing a few near-breakeven years; with no debt and about $12.50 per share of gross cash and investments, the company would survive that comfortably. If we are wrong about the margins and the concentration, the shares are worth roughly the bear case, about $24. The company pays no dividend, so returns come from cash building inside the business (around $2 per share a year at the normal level) and from occasional buybacks such as the $9.9 million repurchase in fiscal 2024. A price of $24 covers about $11 of cash and investments and about $13 for an operating business earning around $2.10 a share. If the normal level holds, within three years the company would hold roughly $17 a share of cash and still earn about $2 a share, which supports a value in the low $40s; from $24 the base case implies a little over 20% a year. If the bear case plays out, the shares would be worth about $26 in three years. Above $24 the bear case implies a real loss while the upside no longer clears 20% a year, so $24 is the margin-of-safety price. Previous published figures for this company were prepared on a different basis and are not comparable with these.