Investment Thesis
Butler National demonstrates strong fundamental health with robust profitability metrics (23.3% net margin, 29.9% operating margin) and healthy cash generation (19.8M free cash flow on 70.3M revenue). The company maintains a solid balance sheet with moderate leverage (0.34x debt/equity) and strong liquidity (1.88x current ratio), supported by substantial cash reserves of 36.5M.
Strengths
- Excellent profitability with net margin of 23.3% and operating margin of 29.9%
- Strong free cash flow generation at 19.8M (28.1% FCF margin) provides financial flexibility
- Conservative capital structure with 0.34x debt/equity ratio and 14.0x interest coverage
- Solid liquidity position with 1.88x current ratio and 36.5M cash reserves
- Positive revenue growth of 7.1% year-over-year with EPS growth of 5.6%
- High returns on equity (21.5%) and assets (11.6%) demonstrate efficient capital deployment
Risks
- Modest revenue growth rate of 7.1% may indicate limited expansion opportunities in the amusement and recreation sector
- Relatively small market capitalization as OTC-listed company may limit liquidity and institutional interest
- Dependence on discretionary consumer spending in amusement/recreation sector creates economic cycle vulnerability
Key Metrics to Watch
- Operating cash flow and free cash flow trends to confirm sustainability of 28%+ FCF margins
- Revenue growth acceleration beyond 7% to validate business expansion momentum
- Debt/equity ratio and leverage changes given moderate 0.34x current level
- Form 4 insider trading activity patterns as indicator of management confidence
Financial Metrics
Revenue
70.3M
Net Income
16.4M
EPS (Diluted)
$0.25
Free Cash Flow
19.8M
Total Assets
141.0M
Cash
36.5M
Profitability Ratios
Gross Margin
34.5%
Operating Margin
29.9%
Net Margin
23.3%
ROE
21.5%
ROA
11.6%
FCF Margin
28.1%
Balance Sheet & Liquidity
Current Ratio
1.88x
Quick Ratio
1.54x
Debt/Equity
0.34x
Debt/Assets
45.8%
Interest Coverage
13.97x
Long-term Debt
25.6M
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: 2026-03-21T16:36:11.592808 |
Data as of: 2026-01-31 |
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