By Tom Kerr, CFA
NASDAQ: KBSX
READ THE FULL KBSX RESEARCH REPORT
1st Quarter 2026 Unaudited Financial Results
On May 6, 2026, FST Corp. (NASDAQ: KBSX) reported unaudited financial results for the quarter ending March 31, 2026, which showed strong revenue growth that was above our expectations. The company also reported a net profit for the first time since going public.
Revenues in the 1st quarter of 2026 were $14.6 million, a 36.2% increase from revenue of $10.8 million for the 1st quarter of 2025. This strong growth was largely driven by a 70% increase in sales to OEM partners and a 64% increase in KBS Graphite Shaft sales. The increase in graphite shaft sales was led by the successful launch of the KBS TGBlack Driver Shaft.
Gross profit improved to $7.6 million (51.6% gross margin) from approximately $5.0 million (46.1% gross margin) in the 1st quarter of 2025. Operating income was $2.18 million, compared to a loss of ($0.84) million in the prior year period. Net income for the 1st quarter was $1.9 million, or $0.04 per share, compared to a net loss of ($2.8) million, or ($0.06) per share, in the 1st quarter of 2025.
Balance Sheet
As of March 31, 2026, the company had cash balances of $7.4 million. Total current assets were $30.1 million, and total current liabilities were $31.5 million at the end of the quarter. Management believes that its current liquidity, together with operating cash flow and available credit facilities, will be sufficient to fund operating requirements for the next 12 months.
New United Kingdom Office
On May 21, 2026, the company announced the opening of its new UK office, a move designed to further the company's presence in the UK and EU golf markets. The office is located in Wokingham, about 40 miles west of London.
This location serves as a combined marketing, education, and logistics hub for FST's European operations. The office will be staffed by a dedicated team including a certified fitter, tour representative, and a UK territory sales manager. The initial focus will be on sales development and customer service, including direct engagement with distributors and over 500 retail golf shops in the UK.
This office will also support players on the DP World Tour, maintain Tour stock inventory, and facilitate OEM liaison work and EU program development with regional equipment partners. The DP World Tour is the premier men's professional golf tour in Europe, formerly known as the European Tour. It works with the PGA Tour through strategic alliances that create pathways for international players to reach the U.S.-based PGA Tour.
The new UK facility features a golf simulator with fitting capabilities used for demonstrations and education, along with a small warehouse space to support European tour operations and limited shipping throughout the region.
CEO Fireside Chat
On April 26, 2026, Zacks SCR hosted a video interview with Chief Executive Officer David Chuang.
A replay of the interview can be found here.
Valuation & Estimates
We adjust our 2026 revenue estimate to $58.1 million, and our 2026 EPS estimate is now $0.09 per share based on stronger-than-expected revenue growth and profitability.
However, we are cautious about growth in the overall golf industry as the Middle East conflict is creating inflation uncertainties and reduced consumer sentiment. In addition, FST may be facing potentially higher fuel, shipping, and other supply chain costs. As a result, we are maintaining our price target of $3.00 until we see further visibility in 2026.
We believe the company can generate double-digit revenue growth over the next 5 years, scaling down to mid-single-digit revenue growth in years 5-10. We believe gross margins can reach the mid 50% range and operating margins can reach the mid-teens range over time.
Our primary valuation tool utilizes a Discounted Cash Flow process. Under the scenario described above, we arrive at a target valuation of $3.00 per share. Our target price may be conservative as it incorporates a high discount rate of 10.0% due to the unpredictability of earnings, prevailing interest rates, and the timeline for reaching higher margins on an annual basis.
The current market cap of only $60 million appears to be irrational and more reflective of the ongoing microcap stock malaise as opposed to company fundamentals.
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