Investment Thesis
Cadiz Inc exhibits severe fundamental deterioration with massive operating losses (-162.1% margin), negative free cash flow (-$18.3M), and a precarious balance sheet burdened by $59.8M in long-term debt against only $4.4M in cash. Despite 382.6% revenue growth, the company is burning cash at an unsustainable rate with negative operating cash flow of -$12.0M, indicating the revenue growth is not translating to viable operations.
Strengths
- Strong revenue growth of 382.6% year-over-year demonstrates market demand or successful commercialization efforts
- Current ratio of 1.26x provides minimal short-term liquidity cushion
- Water supply sector operates in essential services industry with long-term demand potential
Risks
- Catastrophic profitability with net margin of -217.2% and operating margin of -162.1% indicating business model is fundamentally unprofitable at current scale
- Severe cash burn with operating cash flow of -$12.0M and free cash flow of -$18.3M creating urgent sustainability concerns
- High leverage with debt-to-equity ratio of 2.16x, negative interest coverage of -2.9x, and only $4.4M cash against $59.8M long-term debt creating default risk
- Negative ROE (-88.0%) and ROA (-19.1%) demonstrate value destruction for shareholders and asset base deterioration
- Extremely thin gross margin of 1.0% suggests fundamental pricing power or cost structure problems
Key Metrics to Watch
- Operating cash flow trend and path to cash flow breakeven
- Gross margin expansion and operating leverage as revenue scales
- Cash position and runway before potential debt covenant violations or refinancing needs
- Capital expenditure requirements and working capital management
- Revenue sustainability and customer concentration risks
Financial Metrics
Revenue
11.2M
Net Income
-24.4M
EPS (Diluted)
$0.00
Free Cash Flow
-18.3M
Total Assets
128.0M
Cash
4.4M
Profitability Ratios
Gross Margin
1.0%
Operating Margin
-162.1%
Net Margin
-217.2%
ROE
-88.0%
ROA
-19.1%
FCF Margin
-162.6%
Balance Sheet & Liquidity
Current Ratio
1.26x
Quick Ratio
0.96x
Debt/Equity
2.16x
Debt/Assets
78.3%
Interest Coverage
-2.95x
Long-term Debt
59.8M
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: 2026-03-22T03:34:11.486872 |
Data as of: 2025-09-30 |
Powered by Claude AI