Operating margins have struggled to remain positive, recently dipping to -0.7% in 2026Q4 as the company grapples with a 13.4% revenue contraction.
| Metric | Mar'26 | Mar'25 | Mar'24 | Mar'23 | Mar'22 | Mar'21 | Mar'20 | Mar'19 | Mar'18 | Mar'17 | Mar'16 | Mar'15 | Mar'14 | Mar'13 | Mar'12 | Mar'11 | Mar'10 | Mar'09 | Mar'08 | Mar'07 | Mar'06 | Mar'05 | Mar'04 | Mar'03 | Mar'02 | Mar'01 | Mar'00 | Mar'99 | Mar'98 | Mar'97 |
|---|
| Sales/Revenue | 61.33M | 67.61M | 69.37M | 77.54M | 85.49M | 64.89M | 65.37M | 66.58M | 60.67M | 44.52M | 44.57M | 38.08M | 40.93M | 54.07M | 64.78M | 84.02M | 81.61M | 131.74M | 115.28M | 136.78M | 115.28M | 125.59M | 97.19M | 90.91M | 83.32M | 80.85M | 60.96M | 53.4M | 66.2M | 44.5M |
| Revenue Growth % | -9.29% | -2.53% | -10.54% | -9.3% | 31.75% | -0.74% | -1.82% | 9.75% | 36.26% | -0.1% | 17.05% | -6.98% | -24.3% | -16.53% | -22.9% | 2.95% | -38.05% | 14.28% | -15.72% | 18.65% | -8.21% | 29.21% | 6.92% | 9.1% | 3.06% | 32.63% | 14.15% | -19.34% | 48.76% | 45.42% |
| Cost of Goods Sold | 47.61M | 53.97M | 55.47M | 64.7M | 71.54M | 51.72M | 53.5M | 56.31M | 50.95M | 37.07M | 39.77M | 34.64M | 37.79M | 47.26M | 55.32M | 74.47M | 68.96M | 111.57M | 89.85M | 105.51M | 89.85M | 92.07M | 66.11M | 61.01M | 54.45M | 47.56M | 33.48M | 28M | 32.8M | 23.1M |
| COGS % of Revenue | 77.63% | 79.82% | 79.96% | 83.44% | 83.68% | 79.71% | 81.85% | 84.58% | 83.99% | 83.27% | 89.25% | 90.98% | 92.32% | 87.41% | 85.39% | 88.64% | 84.49% | 84.69% | 77.94% | 77.14% | 77.94% | 73.31% | 68.01% | 67.11% | 65.35% | 58.82% | 54.92% | 52.43% | 49.55% | 51.91% |
| Gross Profit | 13.72M | 13.64M | 13.9M | 12.84M | 13.95M | 13.17M | 11.86M | 10.27M | 9.71M | 7.45M | 4.79M | 3.44M | 3.14M | 6.81M | 9.46M | 9.55M | 12.66M | 20.17M | 25.43M | 31.27M | 25.43M | 33.52M | 31.09M | 29.9M | 28.87M | 33.29M | 27.48M | 25.4M | 33.4M | 21.4M |
| Gross Margin % | 22.37% | 20.18% | 20.04% | 16.56% | 16.32% | 20.29% | 18.15% | 15.42% | 16.01% | 16.73% | 10.75% | 9.02% | 7.68% | 12.59% | 14.61% | 11.36% | 15.51% | 15.31% | 22.06% | 22.86% | 22.06% | 26.69% | 31.99% | 32.89% | 34.65% | 41.18% | 45.08% | 47.57% | 50.45% | 48.09% |
| Gross Profit Growth % | 0.56% | -1.87% | 8.29% | -7.98% | 5.97% | 10.97% | 15.52% | 5.72% | 30.41% | 55.41% | 39.49% | 9.29% | -53.83% | -28.05% | -0.87% | -24.56% | -37.25% | -20.68% | -18.7% | 23% | -24.14% | 7.81% | 3.98% | 3.56% | -13.27% | 21.14% | 8.19% | -23.95% | 56.07% | 52.86% |
| Operating Expenses | 11.55M | 11.21M | 10.12M | 9.95M | 11.06M | 9.9M | 10.45M | 9.63M | 7.91M | 9.55M | 10.14M | 8.59M | 10.39M | 10.53M | 11.63M | 18.38M | 15.51M | 19.16M | 15.88M | 17.58M | 15.05M | 15.76M | 14.72M | 15.35M | 14.94M | 15.41M | 16.75M | 14.6M | 17.5M | 10.3M |
| OpEx % of Revenue | 18.84% | 16.58% | 14.59% | 12.83% | 12.94% | 15.27% | 15.99% | 14.47% | 13.04% | 21.45% | 22.75% | 22.56% | 25.38% | 19.47% | 17.96% | 21.87% | 19% | 14.54% | 13.77% | 12.85% | 13.06% | 12.55% | 15.14% | 16.89% | 17.93% | 19.07% | 27.48% | 27.34% | 26.43% | 23.15% |
| Selling, General & Admin | 11.55M | 11.28M | 10.5M | 10.97M | 11.14M | 10.31M | 10.03M | 9.46M | 8.81M | 8.86M | 9.12M | 9.2M | 10.33M | 10.8M | 12.27M | 13.94M | 15.51M | 19.29M | 15.05M | 18.96M | 15.05M | 15.76M | 14.72M | 15.35M | 14.94M | 15.41M | 11.97M | 10.4M | 14.1M | 7.9M |
| SG&A % of Revenue | 18.84% | 16.68% | 15.14% | 14.14% | 13.03% | 15.89% | 15.34% | 14.21% | 14.52% | 19.89% | 20.46% | 24.17% | 25.23% | 19.98% | 18.94% | 16.59% | 19% | 14.64% | 13.06% | 13.86% | 13.06% | 12.55% | 15.14% | 16.89% | 17.93% | 19.07% | 19.64% | 19.48% | 21.3% | 17.75% |
| Research & Development | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| R&D % of Revenue | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| Other Operating Expenses | 0 | -67K | -383K | -1.01M | -74K | -405K | 425K | 174K | -894K | 3.69M | 571K | 2.55M | 0 | 2.06M | -639K | 4.43M | 0 | -132K | 823K | -1.38M | 0 | 0 | 0 | 0 | 0 | 0 | 4.78M | 4.2M | 3.4M | 2.4M |
| Operating Income | 2.17M | 2.43M | 3.79M | 2.89M | 2.76M | 3.26M | 1.41M | -1.63M | 1.8M | -2.1M | -5.35M | -5.15M | -7.25M | -3.72M | -2.17M | -8.83M | -2.45M | 745K | 9.55M | 13.69M | 10.37M | 17.76M | 16.37M | 14.54M | 13.93M | 12.84M | 10.73M | 10.8M | 15.9M | 11.1M |
| Operating Margin % | 3.53% | 3.59% | 5.46% | 3.72% | 3.23% | 5.03% | 2.16% | -2.45% | 2.97% | -4.72% | -12% | -13.54% | -17.7% | -6.88% | -3.35% | -10.51% | -3.01% | 0.57% | 8.29% | 10.01% | 9% | 14.14% | 16.84% | 16% | 16.72% | 15.88% | 17.6% | 20.22% | 24.02% | 24.94% |
| Operating Income Growth % | -10.91% | -35.8% | 31.11% | 4.64% | -15.39% | 130.79% | 186.47% | -190.68% | 185.69% | 60.67% | -3.74% | 28.86% | -94.81% | -71.46% | 75.43% | -259.89% | -429.26% | -92.2% | -30.24% | 31.98% | -41.58% | 8.47% | 12.56% | 4.39% | 8.54% | 19.68% | -0.69% | -32.08% | 43.24% | 54.17% |
| EBITDA | 3.65M | 3.95M | 5.31M | 4.6M | 4.5M | 5.02M | 3.39M | 480K | 3.94M | 32K | -2.97M | -2.33M | -3.62M | 500K | 2.87M | -2.63M | 4.56M | 8.19M | 14.85M | 18.97M | 15.67M | 22.73M | 20.77M | 19.24M | 18.85M | 17.88M | 15.51M | 15M | 19.3M | 13.5M |
| EBITDA Margin % | 5.95% | 5.84% | 7.65% | 5.93% | 5.26% | 7.73% | 5.18% | 0.72% | 6.49% | 0.07% | -6.67% | -6.12% | -8.85% | 0.92% | 4.43% | -3.13% | 5.58% | 6.21% | 12.88% | 13.87% | 13.6% | 18.1% | 21.37% | 21.16% | 22.62% | 22.11% | 25.44% | 28.09% | 29.15% | 30.34% |
| EBITDA Growth % | -7.6% | -25.6% | 15.49% | 2.25% | -10.39% | 48.14% | 605.42% | -87.82% | 12212.5% | 101.08% | -27.64% | 35.71% | -824.8% | -82.57% | 209.05% | -157.72% | -44.32% | -44.88% | -21.7% | 21.01% | -31.04% | 9.41% | 7.99% | 2.05% | 5.45% | 15.25% | 3.4% | -22.28% | 42.96% | 56.98% |
| D&A (Non-Cash Add-back) | 1.48M | 1.52M | 1.52M | 1.71M | 1.74M | 1.75M | 1.97M | 2.11M | 2.14M | 2.13M | 2.37M | 2.82M | 3.62M | 4.22M | 5.04M | 6.2M | 7.01M | 7.44M | 5.3M | 5.27M | 5.3M | 4.97M | 4.4M | 4.69M | 4.92M | 5.04M | 4.78M | 4.2M | 3.4M | 2.4M |
| EBIT | 2.17M | 2.43M | 7.82M | 3.13M | 8.07M | 8.71M | 1.54M | 408K | 1.58M | -1.78M | -4.6M | -4.97M | -6.87M | -3.72M | -2.81M | -4.39M | 1.75M | 1.01M | 9.55M | 13.69M | 10.37M | 17.76M | 16.37M | 14.54M | 13.93M | 17.88M | 10.73M | 10.8M | 15.9M | 11.1M |
| Net Interest Income | 0 | 1.05M | 669K | 282K | 245K | 235K | 218K | 184K | 267K | 319K | 498K | 661K | 722K | 1.22M | 0 | 0 | 0 | 0 | -6K | 0 | -6K | -12K | -16K | 0 | -26K | -6K | -3K | -300K | 0 | 0 |
| Interest Income | 0 | 1.05M | 669K | 282K | 245K | 235K | 218K | 184K | 267K | 319K | 498K | 661K | 722K | 1.22M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Interest Expense | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 6K | 0 | 6K | 12K | 16K | 0 | 26K | 6K | 3K | 300K | 0 | 0 |
| Other Income/Expense | 8.1M | 8.87M | 4.03M | -573K | 5.31M | 5.45M | -2.36M | 3.88M | 4.39M | 3.69M | 571K | 2.55M | 379K | 2.06M | 1.19M | 1.1M | 444K | 168K | 521K | 547K | -382K | 330K | 894K | 812K | -74K | 909K | 462K | -800K | -2.2M | -1.9M |
| Pretax Income | 10.26M | 11.3M | 7.82M | 2.31M | 8.07M | 8.71M | -947K | 4.42M | 6.2M | 1.58M | -4.78M | -2.6M | -6.87M | -1.66M | -979K | -7.73M | 2.19M | 913K | 9.99M | 14.24M | 9.99M | 18.09M | 17.27M | 15.36M | 13.86M | 13.75M | 11.19M | 10M | 13.7M | 9.2M |
| Pretax Margin % | 16.74% | 16.71% | 11.27% | 2.98% | 9.44% | 13.42% | -1.45% | 6.63% | 10.21% | 3.56% | -10.72% | -6.83% | -16.77% | -3.08% | -1.51% | -9.2% | 2.68% | 0.69% | 8.67% | 10.41% | 8.67% | 14.4% | 17.76% | 16.89% | 16.63% | 17% | 18.35% | 18.73% | 20.69% | 20.67% |
| Income Tax | -363K | 162K | 110K | 255K | -165K | 475K | 373K | 144K | 7K | 209K | 158K | 208K | 624K | 328K | 482K | 382K | 690K | -282K | -27K | 1.24M | -27K | 576K | 589K | 3.83M | 535K | 315K | 890K | 500K | 700K | 500K |
| Effective Tax Rate % | -3.54% | 1.43% | 1.41% | 11.02% | -2.05% | 5.46% | -39.39% | 3.26% | 0.11% | 13.19% | -3.31% | -8% | -9.09% | -19.72% | -49.23% | -4.94% | 31.52% | -30.89% | -0.27% | 8.7% | -0.27% | 3.18% | 3.41% | 24.91% | 3.86% | 2.29% | 7.95% | 5% | 5.11% | 5.43% |
| Net Income | 10.63M | 11.14M | 7.71M | 2.06M | 8.23M | 8.23M | -1.32M | 4.27M | 6.19M | 1.38M | -4.93M | -2.81M | -7.49M | -1.99M | -1.46M | -8.11M | 1.5M | 1.2M | 8.78M | 12.17M | 8.78M | 15.18M | 14.72M | 10.24M | 13.32M | 12.81M | 10.3M | 9.5M | 13M | 8.7M |
| Net Margin % | 17.33% | 16.47% | 11.11% | 2.66% | 9.63% | 12.69% | -2.02% | 6.42% | 10.2% | 3.09% | -11.07% | -7.37% | -18.3% | -3.68% | -2.26% | -9.66% | 1.84% | 0.91% | 7.62% | 8.9% | 7.62% | 12.09% | 15.14% | 11.27% | 15.99% | 15.84% | 16.89% | 17.79% | 19.64% | 19.55% |
| Net Income Growth % | -4.59% | 44.48% | 274.41% | -74.99% | 0.01% | 723.56% | -130.89% | -30.97% | 349.85% | 127.89% | -75.71% | 62.51% | -276.19% | -36.28% | 81.99% | -641.29% | 25.44% | -86.39% | -27.85% | 38.59% | -42.18% | 3.15% | 43.71% | -23.12% | 4.01% | 24.39% | 8.4% | -26.92% | 49.43% | 47.46% |
| Net Income (Continuing) | 10.63M | 11.14M | 7.71M | 2.06M | 8.23M | 8.23M | -1.32M | 4.27M | 6.19M | 1.38M | -4.93M | -2.46M | -7.08M | -1.54M | -1.46M | -8.11M | 1.5M | 1.2M | 9.09M | 13M | 10.02M | 15.18M | 14.72M | 10.24M | 13.32M | 12.81M | 10.3M | 9.5M | 13M | 8.7M |
| Discontinued Operations | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -308K | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Minority Interest | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 7.88M | 7.64M | 9.42M | 7.87M | 6.46M | 10.53M | 9.54M | 8.93M | 8.3M | 6.7M | 3.8M |
| EPS (Diluted) | 0.67 | 0.70 | 0.48 | 0.13 | 0.51 | 0.51 | -0.08 | 0.27 | 0.39 | 0.09 | -0.31 | -0.17 | -0.46 | -0.12 | -0.09 | -0.50 | 0.09 | 0.08 | 0.57 | 0.81 | 0.59 | 1.02 | 1.04 | 0.77 | 0.70 | 0.46 | 0.84 | 0.34 | 0.47 | 0.37 |
| EPS Growth % | -4.29% | 45.83% | 269.23% | -74.51% | 0% | 715.2% | -130.7% | -30.77% | 333.33% | 129.03% | -82.35% | 63.04% | -283.33% | -33.04% | 81.96% | -655.56% | 12.5% | -85.96% | -29.63% | 37.29% | -42.16% | -1.92% | 35.06% | 10% | 52.17% | -45.24% | 147.06% | -27.66% | 27.03% | 32.14% |
| EPS (Basic) | 0.67 | 0.70 | 0.48 | 0.13 | 0.52 | 0.52 | -0.08 | 0.27 | 0.39 | 0.09 | -0.31 | -0.17 | -0.46 | -0.12 | -0.09 | -0.50 | 0.09 | 0.08 | 0.57 | 0.81 | 0.59 | 1.04 | 1.08 | 0.79 | 0.71 | 0.46 | 0.84 | 0.34 | 0.51 | 0.38 |
| Diluted Shares Outstanding | 15.92M | 15.95M | 16M | 16.07M | 16.14M | 16.05M | 15.91M | 16.06M | 15.98M | 16.04M | 16.06M | 16.06M | 16.19M | 16.47M | 16.2M | 16.19M | 16.04M | 15.8M | 15.56M | 15.05M | 14.94M | 14.93M | 14.16M | 13.28M | 19.05M | 27.95M | 12.26M | 12.31M | 12.32M | 10.79M |
| Basic Shares Outstanding | 15.92M | 15.94M | 15.94M | 15.94M | 15.93M | 15.91M | 15.91M | 15.88M | 15.88M | 16.04M | 15.92M | 16.06M | 16.19M | 16.47M | 16.2M | 16.19M | 15.96M | 15.79M | 15.52M | 14.96M | 14.91M | 14.66M | 13.66M | 13.01M | 18.91M | 27.7M | 12.18M | 12.31M | 12.32M | 10.79M |
| Dividend Payout Ratio | 30% | 28.62% | 41.35% | 154.83% | 38.7% | 34.8% | - | 37.16% | 17.96% | 163.37% | - | - | - | - | - | - | 108.01% | 317.07% | 108.47% | 79.89% | 83.28% | 60.82% | 62.17% | 73.59% | 54.26% | 36.77% | 46.39% | 62.11% | 29.23% | 32.18% |
Cyclical Revenue Erosion
According to the most recent quarterly data, DSWL experienced a 13.4% year-over-year revenue decline, marking a continued downward trajectory that suggests the company is struggling to maintain its footprint within the highly competitive professional audio and IoT hardware manufacturing sectors during current product cycle lulls.
The consistent revenue erosion indicates that the company's project-based model is highly susceptible to the launch schedules of its OEM clients. This trend warrants further investigation into whether the firm is losing market share to larger, more diversified EMS providers or if the core end-markets are undergoing a structural slowdown.
As reported in financial statements, Deswell's operating margin has frequently dipped into negative territory, such as the -0.7% recorded in 2026Q4, highlighting a precarious reliance on gross margins that struggle to cover fixed administrative overhead during periods of lower capacity utilization at its manufacturing facilities.
While gross margins have shown some resilience, the inability to scale operating income suggests that the company lacks the necessary volume to achieve meaningful operating leverage. Investors should monitor whether management can optimize its cost structure or if the current margin profile is a permanent feature of its niche manufacturing model.
Based on reported figures, there is a significant divergence between the company's thin operating margins and its double-digit net margins, which appears to be driven by interest income generated from its substantial cash reserves rather than core manufacturing performance or operational efficiency improvements.
This decoupling suggests that the reported net income may provide a misleading picture of the underlying business health. Analysts should adjust for these non-operating gains to accurately assess the true earnings power of the manufacturing operations, which currently appear to be at a cyclical inflection point.
Analysis of the income statement reveals that SG&A expenses remain relatively sticky despite the 13.4% revenue decline, indicating that the company's cost structure is not sufficiently variable to protect profitability when demand from key OEM customers in the audio and power tool industries softens.
The lack of R&D investment, while potentially preserving short-term cash, may limit the company's ability to pivot toward higher-margin IoT or medical plastic components. This expense discipline appears to be focused on survival rather than growth, which may hinder long-term competitive positioning in a rapidly evolving hardware landscape.
While the company maintains a fortress balance sheet with zero debt, the market's valuation may be overly optimistic by ignoring the potential for asset impairment charges if the current revenue contraction persists and the carrying value of manufacturing equipment exceeds its future economic utility.
Short-sellers might focus on the fact that the core manufacturing business is effectively generating negligible operating profit, suggesting that the company is functioning more as a cash-holding vehicle. If management fails to deploy this capital effectively, the market may continue to discount the stock toward its liquidation value.
Quick answers to the most common questions about buying DSWL stock.
For fiscal year 2026, Deswell Industries, Inc. (DSWL) reported total revenue of $61.3M. This represents a 37.8% increase compared to $44.5M in 1997.
Deswell Industries, Inc. (DSWL) is profitable, generating $10.6M in net income for the fiscal year ending 2026 with a net profit margin of 17.3%.
Deswell Industries, Inc. (DSWL) reported an operating income of $2.2M, resulting in an operating profit margin of 3.5%. This margin reflects the operational efficiency of the business before interest and taxes.
Deswell Industries, Inc. (DSWL) generated $13.7M in gross profit for the year, representing a gross profit margin of 22.4%. This demonstrates the company's core pricing power and production efficiency.