Investment Thesis
Cheer Holding exhibits concerning operational deterioration despite reported profitability, with negative operating cash flow of -$1.1M contradicting the $2.9M net income, suggesting earnings quality issues. The dramatic -236.8% YoY net income decline and severely outdated financial data from March 2020 (nearly 4 years old) prevent reliable fundamental assessment. Poor return metrics (ROE 4.7%, ROA 3.4%) indicate inefficient capital deployment, raising questions about the sustainability of current operations.
Strengths
- Strong liquidity position with 3.26x current ratio and $10.0M cash
- High operating margin of 29.7% suggests pricing power or cost discipline
- Zero long-term debt and low leverage (0.00x debt-to-equity) provides financial flexibility
Risks
- Massive YoY earnings deterioration of -236.8% indicates serious operational challenges
- Negative operating cash flow of -$1.1M contradicts reported net income, suggesting potential accounting manipulation or poor cash generation
- Data is severely stale (March 31, 2020), making current analysis unreliable for investment decisions
- Extremely low ROE (4.7%) and ROA (3.4%) demonstrate poor capital efficiency
- No insider buying activity in last 90 days despite low valuations suggests lack of management confidence
Key Metrics to Watch
- Operating cash flow trend and reconciliation with net income
- Year-over-year revenue growth and sustainability of margins
- Updated financial statements beyond March 2020 data
Financial Metrics
Revenue
9.8M
Net Income
2.9M
EPS (Diluted)
$0.06
Free Cash Flow
-1.1M
Total Assets
85.7M
Cash
10.0M
Profitability Ratios
Gross Margin
N/A
Operating Margin
29.7%
Net Margin
29.7%
ROE
4.7%
ROA
3.4%
FCF Margin
-11.5%
Balance Sheet & Liquidity
Current Ratio
3.26x
Quick Ratio
3.26x
Debt/Equity
0.00x
Debt/Assets
27.4%
Interest Coverage
N/A
Long-term Debt
N/A
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: 2026-03-22T08:18:10.517485 |
Data as of: 2020-03-31 |
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