Investment Thesis
Chemed Corp demonstrates solid financial discipline with exceptional debt management (Debt/Equity 0.11x, Interest Coverage 165.2x) and strong free cash flow generation ($71.1M, 10.8% FCF margin), but is constrained by poor capital efficiency (ROE 7.8%, ROA 4.3%), deteriorating shareholder returns (EPS -7.8% YoY), and concerning liquidity metrics (Current Ratio 0.85x). The company is financially stable but provides limited shareholder value in its current operational form.
Strengths
- Exceptional balance sheet strength with minimal leverage (Debt/Equity 0.11x) and fortress-like interest coverage (165.2x)
- Robust free cash flow generation of $71.1M representing 10.8% FCF margin relative to revenue
- Stable operating margins of 12.9% and net margins of 10.1% demonstrate profitability resilience in home health care services
Risks
- Liquidity concerns with Current Ratio (0.85x) and Quick Ratio (0.83x) both below 1.0, indicating potential working capital constraints
- Deteriorating shareholder returns with diluted EPS declining 7.8% YoY despite 4.1% revenue growth, signaling cost pressures or inefficient capital allocation
- Chronically poor capital efficiency with ROE of only 7.8% and ROA of 4.3%, indicating underutilization of shareholder capital relative to asset base
Key Metrics to Watch
- Current Ratio and Cash position trending - monitor working capital management for ability to meet near-term obligations
- Diluted EPS trajectory and margin compression - assess whether cost pressures persist or stabilize
- Return on Equity and asset turnover - determine if capital efficiency improvements materialize
Financial Metrics
Revenue
657.5M
Net Income
66.3M
EPS (Diluted)
$4.84
Free Cash Flow
71.1M
Total Assets
1.5B
Cash
16.9M
Profitability Ratios
Gross Margin
N/A
Operating Margin
12.9%
Net Margin
10.1%
ROE
7.8%
ROA
4.3%
FCF Margin
10.8%
Balance Sheet & Liquidity
Current Ratio
0.85x
Quick Ratio
0.83x
Debt/Equity
0.11x
Debt/Assets
44.8%
Interest Coverage
165.19x
Long-term Debt
91.2M
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: 2026-04-29T14:40:15.578417 |
Data as of: 2026-03-31 |
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