AGYS

Agilysys is a high-quality business firing on every operational cylinder. FY2026 revenue grew 15.9% to $319M, gross margin is a software-like 62.6%, operating income jumped 90.4% to $43.0M, and the balance sheet is pristine: $117M cash (+60%), zero long-term debt (paid off the Book4Time/Bank of America credit line), and $70M of operating cash flow against just $1.85M of capex (~$68M free cash flow). The company reinvests heavily — $72.7M of R&D, ~23% of revenue — funding cloud-native POS/PMS expansion and international growth while still growing earnings. This is a durable, founder-mentality 'increasing shareholder value' story with one reportable hospitality-software segment and 45+ years of customer relationships.

The catch is the price, and a lumpy earnings base that flatters the headline. Net income's '+67%' is off a depressed FY2025 ($23.2M); the FY2024 print of $86.2M was clearly inflated by a one-off (almost certainly a tax-asset release), so net income has actually swung 6.5M → 14.6M → 86.2M → 23.2M → 38.8M — not a clean compounding line. Normalize on operations and you get 13.5% operating margins and an 11.9% ROE — solidly good, not spectacular. Against that, the stock trades at 75.5x diluted EPS and 9.1x sales near the high end of its range. That multiple bakes in many years of mid-teens growth with no stumble.