Investment Thesis
Alerus Financial demonstrates strong top-line growth of 62.1% with healthy operating margins and robust free cash flow, but concerning fundamentals undermine investment appeal. Declining EPS of -18.1% despite surging revenue, weak interest coverage of 0.5x, and deteriorating returns on capital (ROE 4.0%, ROA 0.4%) suggest operational stress and potential asset quality issues within the banking operations.
Strengths
- Exceptional revenue growth of 62.1% year-over-year
- Robust free cash flow generation of $25.8M with 38.5% FCF margin
- Conservative capital structure with low leverage (Debt/Equity 0.10x) and $128.8M cash position
Risks
- Interest coverage ratio of 0.5x indicates insufficient operating income to service debt obligations
- EPS declining 18.1% while revenue grows 62.1% signals profitability deterioration and operational leverage failure
- Severely depressed returns on capital (ROE 4.0%, ROA 0.4%) suggest poor asset deployment and potential credit quality deterioration
Key Metrics to Watch
- Interest coverage ratio trajectory and net interest margin compression
- Net income growth acceleration relative to revenue to close profitability gap
- Return on equity and return on assets improvement indicating better capital efficiency
Financial Metrics
Revenue
67.0M
Net Income
23.0M
EPS (Diluted)
$0.89
Free Cash Flow
25.8M
Total Assets
5.3B
Cash
128.8M
Profitability Ratios
Gross Margin
N/A
Operating Margin
45.2%
Net Margin
34.3%
ROE
4.0%
ROA
0.4%
FCF Margin
38.5%
Balance Sheet & Liquidity
Current Ratio
N/A
Quick Ratio
N/A
Debt/Equity
0.10x
Debt/Assets
89.1%
Interest Coverage
0.54x
Long-term Debt
59.2M
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: 2026-05-06T14:19:12.707141 |
Data as of: 2026-03-31 |
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