Investment Thesis
ACI Worldwide generates positive free cash flow (61.2M, 14.4% margin) and maintains moderate leverage (0.54x debt-to-equity), but is severely hampered by historically poor capital efficiency with ROE of only 2.6% and ROA of 1.2%. The concerning 1.5x interest coverage ratio provides minimal financial flexibility, while the suspicious 4195% YoY revenue surge (likely acquisition-driven) introduces significant execution risk.
Strengths
- Strong free cash flow generation at 61.2M with 14.4% FCF margin despite low profitability metrics
- Moderate debt-to-equity leverage at 0.54x provides balance sheet stability relative to equity base
- Reasonable operating margin of 13.5% demonstrates underlying business can generate acceptable operational returns
Risks
- Critically weak return metrics: ROE 2.6% and ROA 1.2% indicate severe capital deployment inefficiency
- Interest coverage ratio of 1.5x leaves dangerous margin for error; covenant breach risk if operations deteriorate
- Massive revenue spike (4195% YoY) strongly suggests acquisition; integration execution risk and synergy realization unclear
Key Metrics to Watch
- Interest coverage ratio improvement toward minimum 2.0-2.5x threshold for debt service safety
- ROE and ROA trajectory to confirm whether acquisition value creation materializes
- Organic revenue growth and core business cash generation excluding acquisition impacts
Financial Metrics
Revenue
425.7M
Net Income
38.3M
EPS (Diluted)
$0.37
Free Cash Flow
61.2M
Total Assets
3.1B
Cash
161.8M
Profitability Ratios
Gross Margin
N/A
Operating Margin
13.5%
Net Margin
9.0%
ROE
2.6%
ROA
1.2%
FCF Margin
14.4%
Balance Sheet & Liquidity
Current Ratio
1.53x
Quick Ratio
1.53x
Debt/Equity
0.54x
Debt/Assets
51.7%
Interest Coverage
1.53x
Long-term Debt
807.4M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-09T09:17:54.253402 |
Data as of: 2026-03-31 |
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