Knowles: 3 Key Takeaways for Long-Term Investors

1. Knowles reported a 20% year-over-year growth in third-quarter 2026 revenue, reaching $184 million. This surge in sales was driven by a 50% increase in customer orders compared to shipments, resulting in a book-to-bill ratio of 1.5. The backlog of signed customer orders awaiting fulfillment has pushed manufacturing lines to near maximum capacity, anticipating new facility capacity to arrive in 2027.

2. The company's leadership aims to broaden its serviced addressable market, developing new components like power attenuators and adapting core pulse-power products for new industrial clients. Additionally, they are increasing component counts within existing hearing health equipment. This strategy, similar to their past investment approach in innovative technologies, is expected to create customized solutions for customers' problems and scale into high-volume production.

3. Knowles' profitability is expected to grow alongside increased manufacturing volumes. Management projects a 30% expansion in operating margins for earnings before interest, taxes, depreciation, and amortization (EBITDA). The gross margin alone is projected to improve by approximately 100 basis points annually, complemented by an additional 50 to 100 basis points of operating leverage due to revenue growth.

This trajectory is supported by the company's proprietary engineering capabilities, which provide a lasting structural edge in defense and medical applications. Their collaboration with customers continues to generate a robust pipeline of design wins, reinforcing the long-term strategic trajectory of revenue growth, margin expansion, and strong cash flow.