Investment Thesis
Flanigans faces significant operational headwinds with net income declining 37.2% YoY despite 9.6% revenue growth, indicating margin compression and deteriorating efficiency in an already thin-margin restaurant business. While balance sheet metrics remain solid and free cash flow is positive, weak returns on capital (ROE 5.3%, ROA 2.5%) and the divergence between revenue and earnings growth suggest structural challenges that offset near-term cash generation.
Strengths
- Conservative leverage (0.27x D/E) with strong interest coverage (11.3x) provides financial stability
- Positive free cash flow generation ($5.7M) despite operational pressure
- Solid liquidity position with 1.84x current ratio
Risks
- Severe profit margin compression: net income down 37.2% while revenue up 9.6% signals cost inflation or pricing power loss
- Extremely weak capital returns (ROE 5.3%, ROA 2.5%) with unsustainably thin net margins (3.4%) typical of under-performing restaurant operations
- Earnings per share growth (49.7%) diverges from net income decline, suggesting accounting benefits rather than operational improvements; zero insider buying in 90 days indicates no management confidence
Key Metrics to Watch
- Operating margin trend and same-store sales growth to determine if revenue growth is sustainable
- Cash flow conversion ratio and path to margin recovery
- Management insider trading activity as confidence indicator
Financial Metrics
Revenue
109.1M
Net Income
3.7M
EPS (Diluted)
$1.98
Free Cash Flow
5.7M
Total Assets
144.8M
Cash
22.8M
Profitability Ratios
Gross Margin
N/A
Operating Margin
5.4%
Net Margin
3.4%
ROE
5.3%
ROA
2.5%
FCF Margin
5.3%
Balance Sheet & Liquidity
Current Ratio
1.84x
Quick Ratio
1.47x
Debt/Equity
0.27x
Debt/Assets
42.9%
Interest Coverage
11.29x
Long-term Debt
18.3M
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: 2026-05-20T07:34:38.140132 |
Data as of: 2026-03-28 |
Powered by Claude AI