Investment Thesis
Amphastar faces severe operational deterioration with declining revenue (-1.7% YoY) and collapsing earnings (-33.7% EPS decline), producing abysmal returns on capital (ROE 0.8%, ROA 0.4%). While strong liquidity and positive free cash flow provide near-term financial stability, the pharmaceutical company lacks competitive strength and requires material business improvements to restore shareholder value.
Strengths
- Excellent liquidity position with 3.85x current ratio and 2.82x quick ratio
- Solid free cash flow generation of $38.3M with 22.4% FCF margin
- Adequate cash reserves of $170.9M providing financial flexibility for operations or restructuring
Risks
- Revenue declining year-over-year (-1.7%) indicating loss of market share or product competitiveness
- Earnings collapsing with 33.7% EPS decline and net income margin compressed to 3.8%
- Interest coverage ratio of 1.6x is critically low with minimal cushion for debt service disruption
- Unacceptable capital returns (ROE 0.8%, ROA 0.4%) demonstrate inefficient capital deployment
Key Metrics to Watch
- Quarterly revenue growth rate - need stabilization and return to positive growth
- Operating margin expansion and net margin improvement - currently 8.0% and 3.8% respectively
- Interest coverage ratio trending above 2.0x minimum threshold for sustainable debt service
Financial Metrics
Revenue
171.2M
Net Income
6.4M
EPS (Diluted)
$0.14
Free Cash Flow
38.3M
Total Assets
1.6B
Cash
170.9M
Profitability Ratios
Gross Margin
41.1%
Operating Margin
8.0%
Net Margin
3.8%
ROE
0.8%
ROA
0.4%
FCF Margin
22.4%
Balance Sheet & Liquidity
Current Ratio
3.85x
Quick Ratio
2.82x
Debt/Equity
0.79x
Debt/Assets
53.1%
Interest Coverage
1.58x
Long-term Debt
609.8M
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: 2026-05-08T09:02:34.194908 |
Data as of: 2026-03-31 |
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