JRSH

Jerash's FY2026 is a genuine recovery year: revenue grew 14% to $166M and net income swung to $3.54M (+517%) from two straight loss years (FY2024 -$2.01M, FY2025 -$848K), driven per MD&A by new customers Hansoll, Acushnet and Tharanco and growth at New Balance (13.7% of sales). The balance sheet is the real attraction — liabilities/equity of just 0.39x, only $2.82M long-term debt, $10.8M cash and $64.8M equity against a $56.5M market cap. At $4.45 the stock trades below book value (~$5.10/share) and at 0.3x sales, with a ~4.5% dividend ($2.54M paid). That's a lot of downside protection for a profitable, growing, lightly-levered manufacturer.

But the quality behind the print is thin. Net margin is only 2.1% and operating margin 3.8%; ROE is 5.5%, so this is a low-return, price-taking contract manufacturer, not a compounder. More telling, operating cash flow was just $2.49M — below reported net income — while capex jumped to $5.13M (+439%), so free cash flow was negative this year and the $2.54M dividend plus capex was funded by drawing cash down 19%. Earnings history is lumpy ($7.92M in FY2022 to two losses to $3.54M now), so the 16.5x P/E rests on a single recovered year, not a durable trend.