E Eltek Ltd.: With Turnaround Completed, This Deep Value High-Tech Manufacturer Is An Intriguing Growth Story


  • ELTK, based in Israel, is a technology company focused on the manufacturing of highly complex Printed Circuit Boards (PCBs), having defense, medical, 5G Telecom, and other industrial applications.
  • I detail my specific unique investment thesis supported by my analysis and insight for why I maintain my continued bullish stance, the prescience of a bright future, and the current deep undervaluation ascribed to ELTK.
  • Six straight quarters GAAP operational profitability and a 330% Year-over-Year (YoY) operational earnings growth based on comparing the first half of 2019 to the half of 2020 even during COVID-19.
  • Favorable financial metrics, including a PE (10.8) TTM and a forward PE less than 8, conservative forward 2-year PEG of (0.54), Price to Sales (0.6), and industry comparison support my undervaluation analysis.
  • ELTK’s corporate culture of success and excellence will enable ELTK to seize growth opportunities from macroeconomic factors, including the trade war and peace between UAE, Bahrain, and Israel.

(Disclosure: I am a 5%+ shareholder of ELTK and an Activist Investor in the Company. All statements not sourced are my opinion only. Full disclosure statement appears at the end of this article.)

Eltek Ltd. (Nasdaq: ELTK) is a global supplier and manufacturer of sophisticated and highly advanced Printed Circuit Boards (PCBs) based in Petah Tikva, Israel.

Please reference my previous Seeking Alpha article (Eltek Ltd.: A Company Poised And Ready To Take Advantage Of The Global Supply Chain Shift) for background information about ELTK, historical trading, and the company's successful turnaround.

Since March 20, 2020, the publication date of that article, ELTK's risen ~75% from $2.83 to $4.95 per share at the close on September 22, 2020. This article provides details for why I believe ELTK is significantly undervalued, and the future potential upside. The current market mispricing creates a massive opportunity for people to invest in this microcap gem.

Investment Thesis

ELTK is a world-leading technology company in PCB manufacturing with a strong financial backing and consistent performance demonstrated by six quarters of GAAP operational profitability with both topline and margin growth YoY.

ELTK may deliver 0.64 cents GAAP operational profit (or greater) for the coming year compared with 0.48 cents for the previous year. I believe this operational profit growth is not reflected in the current share price.

From an investment perspective, I believe ELTK should be analyzed starting from Q1 2019, as that was ELTK’s 1st quarter post company turnaround. Any financial analysis or comparison before that is irrelevant, or at best, highly flawed. With the company turnaround and the recent global political changes, I view ELTK as a new company supported by a 50-year history. ELTK’s operational GAAP earnings growth combined with multiple macroeconomic factors and a forecast Compound Annual Growth Rate (CAGR) “of 5% to 7% from 2020 to 2025” (source: Lucintel.com) within the PCB industry will facilitate ELTK’s expansion.

I believe ELTK is significantly undervalued and the market is not aware of ELTK’s successful turnaround, the financial results of past six quarters, and the growth story.

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Disclosure: I am long ELTK, and I own 5%+ of the Company as filed in schedule 13D with the SEC. Information presented in this article is my own opinion and is for informational purposes only; it ...

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Michael McGauley 4 weeks ago Author's comment

I'm happy to see so many people found my analysis thorough and insightful. Yes, I'm not a bot.

For a recent 3rd-party analysis, here you go. The article agrees Eltek's fundamentals "have legs."


Terrence Howard 3 weeks ago Member's comment

Thanks Michael, unfortunately that article is locked to subscribers. Shareholders Unite, any chance you'd be willing to share your thoughts on #ELTK here?

Old Time Investor 4 weeks ago Member's comment

I agree, this stock is undervalued and friendly to shareholders. Certainly worth a closer look!

Danny McGuire 3 weeks ago Member's comment

Wow! Another comment from someone that has not done so in 5 years! This time on the bull side! People do your DD and skip the comments section on this site. At least, the articles on the site are worth reading.

Katy Lin 4 weeks ago Member's comment

Wow, you've acquired quite the stake in this company haven't you?! You must really believe in $ELTK.

Danny McGuire 4 weeks ago Member's comment

First comment in 5 years! How fake is this? What is going on here? Thank you Currency Trader for making me do more DD on the commenters on this website.

Dick Kaplan 4 weeks ago Member's comment

Very interesting and convincing, Michael McGauley. Though I do have concerns about possible bias. Do you cover any other stocks? The only articles you seem to have written are about $ELTK.

Danny McGuire 4 weeks ago Member's comment

The author is sharing his investment thesis and reasoning. It is his sole prerogative to write what he wants and when he wants it. He does not need to cover any other stocks. He is his own man.

Edward Simon 4 weeks ago Member's comment

Mike, great article. Thanks for the in-depth analysis. As with many Defense related stocks, companies like these can suffer from ups and downs, based on anticipated vs actual business, as well as inefficiencies driven by specific customer specifications. It is a question of management. Hopefully, what you report is true with regards to Eltek. Only time will tell.

Danny McGuire 4 weeks ago Member's comment

All companies "can suffer from ups and downs, based on anticipated vs actual business." Not a very insightful statement. I have no idea what you are talking about in regards to " inefficiencies driven by specific customer specifications." ELTK is in the niche high end PBC market. Meeting customer specs gives the company margin growth as seen in the past few quarters along with improving customer retention. Questioning the honesty of the author is the worst part of your banal comment. You do realize that the author is a verifiable real person, unlike you.

Currency Trader 4 weeks ago Member's comment

The author may be a real person, but are you? Who are you exactly? Unlike everyone else on this thread, you have no comments on this entire site, other than this article. It seems you registered specifically to jump to the defense of an author who, one would think you don't even know. Or do you? Perhaps you are the author using a different name? I noticed he did not respond at all.

I actually found the article very convincing but your comments are making me highly suspect

Danny McGuire 4 weeks ago Member's comment

A person that goes by the username, Currency Trader, is asking me who exactly I am? A user with only two comments that are dated 2 to 5 years ago that now only suddenly appears today on a microcap stock and questions my integrity? I find that laughable and highly suspect.

BTW, I have traded ELTK off and on over the years. I came to the website because there was a new article on ELTK and I did not even know this website existed so I decided to give it a try. I am not the one that attacked the integrity of the author, which could be construed as libellous. It appears that you like going down crank rabbit holes yourself with your other questions. Again, highly suspect.

David M. Green 4 weeks ago Member's comment

Bullish on $ELTK.

Kurt Benson 4 weeks ago Member's comment

Very thorough analysis.