Investment Thesis
Alta Equipment Group exhibits severe financial distress with negative stockholders' equity of -$8.8M, indicating the company is technically insolvent. The company is unprofitable with -$80.3M net income, dangerously low interest coverage of 0.3x, and deteriorating operating margins of 1.3%, creating substantial risk of covenant violations and potential bankruptcy.
Strengths
- Positive operating cash flow of $33.0M provides short-term liquidity cushion
- Positive free cash flow of $23.8M demonstrates ability to generate cash despite losses
- Gross margin of 25.9% indicates reasonable product pricing power in core operations
Risks
- Negative stockholders' equity of -$8.8M indicates technical insolvency and high bankruptcy risk
- Critical interest coverage ratio of 0.3x signals inability to service $484.5M long-term debt obligations
- Negative net income of -$80.3M with worsening EPS (-30.1% YoY) shows accelerating operational deterioration
- Net margin of -4.4% and operating margin of 1.3% demonstrate unprofitable business model
- Revenue declining 2.2% YoY despite negative net income indicates structural challenges
Key Metrics to Watch
- Stockholders' equity trend - critical to monitor for further deterioration
- Interest coverage ratio - current 0.3x level unsustainable for long-term debt servicing
- Operating margin progression - 1.3% margin must improve significantly to achieve profitability
- Debt covenant compliance status and refinancing runway
- Cash burn rate relative to operating cash flow sustainability
Financial Metrics
Revenue
1.8B
Net Income
-80.3M
EPS (Diluted)
$-2.55
Free Cash Flow
23.8M
Total Assets
1.3B
Cash
18.6M
Profitability Ratios
Gross Margin
25.9%
Operating Margin
1.3%
Net Margin
-4.4%
ROE
N/A
ROA
-6.0%
FCF Margin
1.3%
Balance Sheet & Liquidity
Current Ratio
1.43x
Quick Ratio
0.48x
Debt/Equity
N/A
Debt/Assets
100.7%
Interest Coverage
0.26x
Long-term Debt
484.5M
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: 2026-03-19T21:10:11.980355 |
Data as of: 2025-12-31 |
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