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VPG

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Thesis. Record AI-related orders and a 1.44 Sensors book-to-bill sitting on top of a negative operating margin and a third straight 79% EPS miss — real demand in a genuine niche, with no demonstrated ability to price it.
Reviewed 19 Sep 2026, after Q2 2026 results. Next review at the Q3 print, which management has framed as the margin-recovery test.

What it does

VPG makes precision sensors and measurement equipment across three segments: Sensors (precision resistors and strain gauges), Weighing Solutions (load cells, force transducers) and Measurement Systems (rolling-force load cells for steel mills, crash-test data acquisition, thermal-mechanical simulation). Spun out of Vishay Intertechnology in 2010; fifteen brands including Alpha Electronics, Powertron, KELK, DTS and Gleeble. CEO Ziv Shoshani, 2,100 employees.
A strain gauge is a thin foil pattern that changes resistance when the material it is bonded to deforms — the building block of force measurement. A precision resistor is manufactured to extremely tight tolerance for applications where measurement accuracy matters.
⚠️ 52-week range $27.33–$151.78. It ran roughly 282% year to date to a June peak and sits about 57% below the high — a full mania-and-unwind cycle inside twelve months.
Apply the margin test. Record AI-related orders alongside a falling gross margin and a negative operating margin means the company is not extracting value from the demand. It is a beneficiary, not an owner.

Bull case

  • Record quarterly orders for precision resistors serving AI semiconductor, datacentre, aerospace and defence applications
  • Sensors segment book-to-bill 1.44, on record orders of $48.1M in AI-related markets
  • Consolidated book-to-bill 1.14 — a seventh consecutive quarter at or above 1.0. Bookings $95.5M against $83.9M of revenue. Q1 was stronger still at 1.21 on $102.1M of bookings, with backlog $125M
  • Management now expects FY2026 organic revenue growth to exceed the 8–10% three-year target
  • $6M of cost savings on track for 2026, part of a $20M three-year programme
  • New C-suite structure installed November 2025; business development initiatives generated $10M of orders in Q1 against a $45M full-year goal
  • DTS named 2026 Supplier of the Year by Automotive Testing Technology International
  • Genuinely diversified end markets — steel, aerospace, defence, medical, automotive testing — so not a pure AI derivative

Bear case

  • Q2 2026 revenue $83.9M (+11.7%) but gross margin fell from 40.7% to 38.6%, and operating margin went from +3.6% to NEGATIVE 0.4%
  • GAAP net loss $1.7M (−$0.13/share) against +$0.3M a year earlier
  • Adjusted EPS $0.04 against a $0.19 estimate — a 79% miss, with revenue missing too
  • A third consecutive quarter of large adjusted-EPS misses. Q4 CY2025 was $0.07 against $0.21, a 66% miss, with adjusted EBITDA missing by 24%
  • Revenue was flat sequentially ($84.4M → $83.9M) despite the record orders
  • FX reduced profits by $3.3M year over year. On a company with roughly break-even operating income, that is the entire result
  • $3M of KELK shipments delayed by a new ERP system — self-inflicted
  • CFO William Clancy retiring 31 December 2026 after 38 years, with no named successor. Losing a CFO mid-transformation, mid-ERP-implementation, after three straight misses is poor timing
  • ISS Shareholder Rights score of 10 — the worst decile. Global steel described as "challenging"
  • The precision resistor market is only ~$5.4B growing ~6% — a small pond

Major customers

  • AI semiconductor and datacentre customers — precision resistors, $48.1M of record orders. Individual names not disclosed
  • Aerospace and defence primes — named alongside AI as a growth driver
  • Steel producers — KELK rolling-force load cells; currently a weak end market
  • Automotive OEMs and test labs — DTS crash-test data acquisition
  • Industrial and process manufacturers — Weighing Solutions (truck scales, on-board weighing)
  • Medical device makers — precision force measurement
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Read-through. VPG sells measurement equipment into the AI buildout rather than owning anything in it — structurally closest to
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VIAV in this file. Its $48.1M of record AI-related orders is another independent confirmation of the same demand
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FPS and
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ETN report, from an unrelated corner of the supply chain. But it is also the clearest worked example in this file of why the margin test matters: the order book says the demand is real, and the income statement says VPG cannot charge for it. Contrast
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SNDK at 84.6% gross margin — same buildout, opposite pricing power. Use this page to confirm demand, not to own it.

What would change the view

  1. Whether Q3 lands inside the $84–89M guide with margin recovery. Management has promised improvement three times; a fourth miss says the margin problem is structural
  2. Sensors book-to-bill holding above 1.0, currently 1.44
  3. FX impact — stripping it out, the operating result flips positive, so this decides whether the problem is operational or translational
  4. The ERP transition completing and the $3M KELK backlog shipping
  5. CFO succession
  6. Whether AI-related orders are ever disclosed as a revenue percentage rather than only as an order figure

Update log

19 Sep 2026 — Converted to the standard template, and a Stack Layer assigned: Semi Components. The page previously had none and carried a note that it "would rank ~6th in Semi Manufacturing if added to that category" — a category that does not exist in the current Stack Layer list. Semi Components is where precision resistors and passive components belong.
2 Sep 2026 — Page written up post-Q2, with the margin test applied explicitly.
Q2 2026 — Revenue $83.9M (+11.7%) but flat sequentially; gross margin 38.6% (from 40.7%); operating margin −0.4% (from +3.6%); GAAP net loss $1.7M (−$0.13/sh); adjusted EPS $0.04 against $0.19 — a 79% miss, the third consecutive large miss. Consolidated book-to-bill 1.14 on $95.5M of bookings; Sensors book-to-bill 1.44 with record $48.1M of AI-related orders. FX reduced profits by $3.3M; $3M of KELK shipments delayed by the new ERP.
Q1 2026 — Bookings $102.1M, book-to-bill 1.21, backlog $125M.
Nov 2025 — New C-suite structure installed.
Research and education only — not investment advice.