Investment Thesis
AMERISAFE exhibits deteriorating operational performance with net income declining 15% YoY despite only 2.7% revenue growth, indicating significant margin compression. Critically, operating cash flow is negative at -$2.7M, combined with exceptionally weak returns on equity (3.3%) and assets (0.7%), signaling structural profitability challenges that outweigh the benefit of a debt-free balance sheet.
Strengths
- Zero long-term debt provides substantial financial flexibility and stability
- Debt-to-equity ratio of 0.00x indicates conservative capital structure
- Operating margin of 12.7% demonstrates reasonable pricing power in competitive insurance market
Risks
- Negative operating cash flow of -$2.7M suggests the company is consuming cash from core operations despite reported profits
- Net income declining 15% YoY while revenue grows only 2.7% indicates severe margin compression and rising cost pressures
- Extremely low ROE (3.3%) and ROA (0.7%) indicate poor capital deployment and inefficient business model
Key Metrics to Watch
- Operating cash flow trajectory - must turn positive to validate profit quality
- Net profit margin trend - currently under pressure and requires stabilization
- Return on equity - needs substantial improvement from current 3.3% level
Financial Metrics
Revenue
80.1M
Net Income
8.1M
EPS (Diluted)
$0.43
Free Cash Flow
-2.7M
Total Assets
1.1B
Cash
34.2M
Profitability Ratios
Gross Margin
N/A
Operating Margin
12.7%
Net Margin
10.2%
ROE
3.3%
ROA
0.7%
FCF Margin
-3.4%
Balance Sheet & Liquidity
Current Ratio
N/A
Quick Ratio
N/A
Debt/Equity
0.00x
Debt/Assets
78.0%
Interest Coverage
17.95x
Long-term Debt
N/A
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: 2026-04-29T13:38:09.945364 |
Data as of: 2026-03-31 |
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