Deswell IndustriesFRA:DW2 -0.60%62 Operating Margin % is 7.09% as of Sep. 2025, which is 136% above its 10-year median of 3.01. GuruFocus rates FRA:DW2 with a GF Score™ of 62/100 and a GF Value™ of €1.95 (Significantly Overvalued). The stock has 5 warning signs investors should review. Among 2,472 Hardware companies, Deswell Industries ranks worse than 51.05% on this metric.
Just like Gross Margin %, it is important to see a company maintains its operating margin over time. Among the same industry, a company with higher operating margin is more efficient in its operation. It is also more stable during industry slowdown or recessions. Peter Lynch prefers those with higher margins than those with lower margins.
Be Aware
Operating Margin % can be manipulated by adjusting the rate of depreciation, depletion and amortization (DDA).
If a company is facing competition, its Operating Margin % may decline. Often the Operating Margin % declines well before the company's Revenue or even profit decline. Therefore, Operating Margin % is a very important indicator of whether the company is facing problems.
For instance, by 2012, Nokia (NOK)'s problems were well known and its stock had lost more than 90% of its market value since 2007. But Nokias Operating Margin % had already been in decline since 2002, although its Earnings per Share (Diluted) were still rising. Investors who paid attention to Operating Margin % would have avoided this huge loss. The same can be said for Research-in-Motion (RIMM).
Therefore, Operating Margin % is a very important screening filter for GuruFocus. GuruFocus's Buffett-Munger screener requires that the profit margin is either consistent or expanding. The Model Portfolio of the Buffett-Munger screener has outperformed the market every year since inception in 2009.
Deswell Industries Operating Margin % Related Terms
Deswell Industries Operating Margin % Historical Data
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The historical data trend for Deswell Industries's Operating Margin % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
FRA:DW2 vs WBX, HOLO, IEHC: Operating Margin % Comparison
For the Electronic Components subindustry, Deswell Industries's Operating Margin %, along with its competitors' market caps and Operating Margin % data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Deswell Industries Operating Margin % vs Hardware Industry
For the Hardware industry and Technology sector, Deswell Industries's Operating Margin % distribution charts can be found below:
* The bar in red indicates where Deswell Industries's Operating Margin % falls into.
Operating Margin % - also known as operating income margin, operating profit margin and return on sales (ROS) - is the ratio of Operating Income divided by net sales or Revenue, usually presented in percent.
Deswell Industries's Operating Margin % for the fiscal year that ended in Mar. 2026 is calculated as
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Deswell Industries (FRA:DW2) has a Operating Margin % of 7.09% as of Sep. 2025. Operating margin is the ratio of total operating income to net sales. View historical data on Deswell Industries and its competitors. This is 136% above median its historical median of 3.01. According to the industry distribution chart, Deswell Industries ranks #1262 out of 2472 companies in the Hardware industry, placing it in the top 51.1%.
Is Deswell Industries' Operating Margin % too high?
Deswell Industries' current Operating Margin % of 7.09% is 136% above median its 10-year median of 3.01. The Hardware industry median Operating Margin % is 3.80. Deswell Industries' value of 7.09% is 86.6% above this industry median. Based on the distribution chart, Deswell Industries ranks #1262 out of 2472 companies in the Hardware industry, which is below the industry midpoint. Overall, Deswell Industries has a GF Score™ of 62/100 and is considered Significantly Overvalued, reflecting its overall financial health beyond just this single metric.
How does Deswell Industries' Operating Margin % compare to WBX and HOLO?
According to the Hardware industry distribution chart, Deswell Industries ranks #1262 out of 2472 companies for Operating Margin %. This places Deswell Industries in the lower half of its industry. The industry median Operating Margin % is 3.80. Deswell Industries' value of 7.09% is 86.6% above this benchmark. While the company's 10-year median is 3.01 vs. the industry median of 3.80, Deswell Industries has consistently been above the industry average. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Operating Margin % for a Hardware company?
The median Operating Margin % among Hardware companies is 3.80, based on 2,472 companies in the industry. Companies in the top quartile (top 25%) have a Operating Margin % significantly above this median, while those in the bottom quartile fall well below. However, Operating Margin % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Deswell Industries's current Operating Margin % of 7.09% is 86.6% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Operating Margin % mean?
A high Operating Margin % can signal that a stock is expensive relative to its fundamentals. Operating margin is the ratio of total operating income to net sales. View historical data on Deswell Industries and its competitors. For the Hardware industry, the median Operating Margin % is 3.80 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Deswell Industries's current Operating Margin % is 7.09%, which is 136% above median its own 10-year median of 3.01. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Deswell Industries stock overvalued right now?
Based on GuruFocus' analysis, Deswell Industries (FRA:DW2) is currently considered Significantly Overvalued. The stock's GF Value™ is €1.95, compared to a current price of €3.30 — trading 69.2% above its estimated fair value. The current Operating Margin % is 7.09%, which is 136% above median its 10-year median of 3.01 and 86.6% above the Hardware industry median of 3.80. Deswell Industries' overall GF Score™ is 62/100 with 5 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Operating Margin % calculated?
Operating Margin % is calculated from a company's financial statements. For Deswell Industries (FRA:DW2), the current Operating Margin % is 7.09% as of Sep. 2025. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Deswell Industries (FRA:DW2) Overvalued in 2026?
Based on GuruFocus' analysis, Deswell Industries stock appears to be overvalued.
The current stock price of €3.30 is trading 69.2% above its estimated GF Value™ of €1.95.
GuruFocus considers Deswell Industries to be Significantly Overvalued.
Key valuation signals for FRA:DW2:
Operating Margin %: 7.09% (136% above median its 10-year median of 3.01)
GF Value™: €1.95 vs. price of €3.30 (69.2% above fair value)
Industry Position: 86.6% above the Hardware median (#1262 of 2472)
No single metric tells the full story. See the FRA:DW2 stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Deswell Industries Inc is engaged in the manufacturing and selling of injection-molded plastic parts and components. In addition, it also offers manufacturing services for electronic products and subassemblies and manufactures metallic molds and accessory parts for original equipment manufacturers and contract manufacturers. The company conducts all of its manufacturing activities at separate plastics, electronics and metallic operation factories located in the People's Republic of China. It operates through the Plastic Injection Molding and Electronic Products Assembling segments. The firm offers products such as automobile components, medical testing equipment, parts for audio equipment, av receivers, active subwoofers, digital system key sets, communication products and others.
62GF Score
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