Investment Thesis
Alpha Pro Tech demonstrates solid financial health with exceptional liquidity and zero debt, but faces headwinds from declining profitability despite modest revenue growth. The company's modest 6.0% net margin and 4.8% ROA suggest limited operational efficiency, while weak free cash flow conversion (2.9% FCF margin) indicates capital allocation challenges.
Strengths
- Exceptional liquidity with 12.94x current ratio and 7.13x quick ratio providing financial flexibility
- Debt-free balance sheet with zero long-term debt and strong equity position of $62.5M
- Stable revenue base in surgical appliances sector with $59.1M in annual revenue
Risks
- Net income declining 10.1% YoY while revenue only grows 2.3% suggests margin compression and operational challenges
- Low profitability metrics with 6.5% operating margin and 5.7% ROE indicate weak operational returns on shareholder capital
- Operating cash flow of only $2.4M relative to $59.1M revenue represents poor cash generation efficiency
Key Metrics to Watch
- Gross margin trend - currently at 38.1% but needs monitoring for cost pressures
- Operating cash flow growth - critical metric as current $2.4M is concerning relative to revenue scale
- Net margin recovery - must reverse the -10.1% YoY decline to demonstrate operational improvement
Financial Metrics
Revenue
59.1M
Net Income
3.5M
EPS (Diluted)
$0.33
Free Cash Flow
1.7M
Total Assets
74.1M
Cash
17.0M
Profitability Ratios
Gross Margin
38.1%
Operating Margin
6.5%
Net Margin
6.0%
ROE
5.7%
ROA
4.8%
FCF Margin
2.9%
Balance Sheet & Liquidity
Current Ratio
12.94x
Quick Ratio
7.13x
Debt/Equity
0.00x
Debt/Assets
15.7%
Interest Coverage
N/A
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: 2026-03-20T01:34:11.001724 |
Data as of: 2025-12-31 |
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