Investment Thesis
Crown Holdings exhibits severe financial distress with an interest coverage ratio of 0.8x, meaning operating income cannot cover debt interest obligations. The company generated negative operating cash flow (-$54M) and negative free cash flow (-$141M), indicating fundamental operational problems. Combined with high leverage (2.13x Debt/Equity) and declining net income (-16.4% YoY), the company faces potential debt service challenges.
Strengths
- Modest revenue growth of 4.8% YoY shows market demand in packaging sector
- Operating margin of 11.2% remains stable despite profitability headwinds
- Cash position of $584M provides some liquidity cushion for near-term obligations
Risks
- Interest coverage of 0.8x indicates inability to service debt from operations - critical solvency risk
- Negative operating cash flow (-$54M) and free cash flow (-$141M) demonstrate cash burn despite positive net income
- High leverage (2.13x D/E, $6.2B debt vs $2.9B equity) with declining profitability creates refinancing risk
- Quick ratio of 0.70x below 1.0 indicates potential short-term liquidity stress
- ROE of 6.0% and ROA of 1.2% reflect severely diminished capital efficiency
- Net income declining 16.4% YoY while revenue grows suggests margin compression and operational deterioration
Key Metrics to Watch
- Interest coverage ratio trend - critical to monitor debt sustainability
- Operating cash flow - must return to positive to confirm operational health
- Debt/Equity ratio - watch for covenant violations or refinancing pressures
- Quick ratio and liquidity position - monitor ability to meet near-term obligations
- Net margin trajectory - assess if profitability decline stabilizes
Financial Metrics
Revenue
3.3B
Net Income
175.0M
EPS (Diluted)
$1.56
Free Cash Flow
-141.0M
Total Assets
14.3B
Cash
584.0M
Profitability Ratios
Gross Margin
15.7%
Operating Margin
11.2%
Net Margin
5.4%
ROE
6.0%
ROA
1.2%
FCF Margin
-4.3%
Balance Sheet & Liquidity
Current Ratio
1.12x
Quick Ratio
0.70x
Debt/Equity
2.13x
Debt/Assets
0.0%
Interest Coverage
0.81x
Long-term Debt
6.2B
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: 2026-05-06T12:18:07.693186 |
Data as of: 2026-03-31 |
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