Investment Thesis
Century Communities is in operational distress with interest coverage of 0.4x, indicating inability to cover debt service from operating income. Negative operating cash flow (-$50.3M) and sharply declining profitability (net income down 55.8% YoY) signal deteriorating financial health despite a moderate debt-to-equity ratio.
Strengths
- Moderate debt-to-equity ratio of 0.57x demonstrates relative leverage discipline
- Positive stockholders' equity of $2.6B provides equity cushion for creditors
- Still generating positive net income of $24.4M despite severe margin compression
Risks
- Interest coverage of 0.4x is critically low—operating income cannot cover interest expenses, indicating imminent solvency stress
- Negative operating cash flow of -$50.3M and free cash flow of -$57.1M show cash burn despite positive net income; quality of earnings concern
- Net income collapsed 55.8% YoY while revenue declined 6.4% YoY, demonstrating accelerating profit deterioration and potential margin floor breach
Key Metrics to Watch
- Operating cash flow recovery—must return to positive to demonstrate operational sustainability
- Interest coverage ratio—must exceed 1.0x to service debt from operations without capital infusions
- Gross margin and operating margin stabilization—further compression indicates structural profitability crisis
Financial Metrics
Revenue
789.7M
Net Income
24.4M
EPS (Diluted)
$0.84
Free Cash Flow
-57.1M
Total Assets
4.5B
Cash
78.2M
Profitability Ratios
Gross Margin
11.5%
Operating Margin
4.2%
Net Margin
3.1%
ROE
1.0%
ROA
0.5%
FCF Margin
-7.2%
Balance Sheet & Liquidity
Current Ratio
N/A
Quick Ratio
N/A
Debt/Equity
0.57x
Debt/Assets
43.4%
Interest Coverage
0.41x
Long-term Debt
1.5B
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: 2026-04-29T13:43:12.922261 |
Data as of: 2026-03-31 |
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