Franklin Wireless: Lake Street initiates coverage on Buy, PT $6

Franklin Wireless: Lake Street initiates coverage on Buy, PT $6

Franklin Wireless Corp. (FKWL) has seen a significant upturn in its stock performance and financial results, with shares gaining 6.6% since the fiscal 2025 results were reported. This growth outpaced the S&P 500 index's 1.2% increase over the same period, indicating investor confidence in the company's latest financial performance and strategic initiatives Franklin Wireless Posts Increased FY25 Sales, Narrower Y/Y Loss^[1].

For the fiscal year ended June 30, 2025, Franklin Wireless reported net sales of $46.09 million, a substantial 49.7% increase from $30.80 million in fiscal 2024. The company posted a net loss of $243,101, narrower than the $3.96-million loss recorded in the prior year. Basic and diluted loss per share was 2 cents compared to a 34-cent loss per share in fiscal 2024, highlighting significant operational recovery Franklin Wireless Posts Increased FY25 Sales, Narrower Y/Y Loss^[1].

Gross profit surged to $7.92 million from $3.51 million a year ago, driven by stronger sales and a more favorable product mix. The gross margin improved from 11.4% to 17.2%, reflecting better cost control and possibly improved sourcing through its joint venture partnership Franklin Wireless Posts Increased FY25 Sales, Narrower Y/Y Loss^[1].

Selling, general, and administrative expenses increased to $6.25 million from $5.06 million due to higher personnel costs and increased legal and professional fees associated with ongoing litigation settlements Franklin Wireless Posts Increased FY25 Sales, Narrower Y/Y Loss^[1].

The balance sheet remained solid, with cash and cash equivalents increasing to $14.74 million and short-term investments rising to $25.89 million. Total assets rose to $51.33 million, reflecting higher inventory levels and the addition of receivables tied to related-party transactions. Total liabilities stood at $13.44 million, with inventories rising sharply to $2.36 million, suggesting preparation for increased sales volumes in fiscal 2026. Shareholders' equity increased modestly to $37.89 million, supported by non-controlling interests linked to the new joint venture, Sigbeat Franklin Wireless Posts Increased FY25 Sales, Narrower Y/Y Loss^[1].

Management underscored operational improvements, particularly the successful restructuring of supplier relationships and the positive impacts of product introductions in wireless connectivity solutions. The company noted that the formation of the Sigbeat joint venture with Forge International Co., Ltd. — in which Franklin holds a 60% stake — aims to expand its global reach in telecommunications modules and hardware solutions. This partnership contributed to the sharp increase in electronic manufacturing service purchases, which totaled $13.7 million in fiscal 2025 compared with only $177,000 in the prior year Franklin Wireless Posts Increased FY25 Sales, Narrower Y/Y Loss^[1].

Lake Street Initiates Coverage
Lake Street Initiates Research has recently initiated coverage on Franklin Wireless with a "Buy" rating and a price target of $6. The analyst noted the company's strong financial performance and the potential for continued growth driven by its strategic initiatives and partnerships .

The company's stable cash position and low leverage provide a buffer to navigate potential macroeconomic headwinds and competitive pressures in the wireless connectivity market. Lake Street highlighted the company's operational improvements and the potential for future growth, particularly through its Sigbeat joint venture.

Franklin Wireless' stock performance and financial results suggest that the company's turnaround strategy is beginning to yield tangible results. The narrower net loss, coupled with increased sales and gross profit, indicates that the company is on the right track to improve its financial health.