Investment Thesis
Vita Coco demonstrates strong fundamental health with 18.2% revenue growth, excellent 18.7% operating margins, and a debt-free balance sheet with $201.9M cash. However, the significant divergence between net income ($30.5M) and operating cash flow ($15.6M) raises concerns about earnings quality and working capital management that warrant monitoring.
Strengths
- Debt-free balance sheet with zero long-term debt and $201.9M in cash equivalents (41% of assets)
- Revenue growth of 18.2% YoY with EPS growth of 26.6% indicating operational leverage and margin expansion
- Exceptional liquidity position with 3.65x current ratio and 2.95x quick ratio, well above industry minimums
- Low capital intensity with CapEx at only 0.26% of revenue ($461K on $179.8M revenue)
Risks
- Operating cash flow of $15.6M significantly lags net income of $30.5M, suggesting potential earnings quality or working capital issues
- Free cash flow margin of 8.4% substantially below net margin of 17%, indicating cash conversion challenges
- Modest ROE of 8.7% and ROA of 6.2% despite strong profitability suggests capital is underdeployed or inefficiently allocated
- High insider trading activity with 41 Form 4 filings in 90 days requires investigation regarding insider sentiment
Key Metrics to Watch
- Operating cash flow to net income ratio and working capital trends
- Gross margin sustainability as company scales revenue
- Free cash flow generation and capital allocation strategy
- Insider trading patterns and aggregate insider ownership changes
Financial Metrics
Revenue
179.8M
Net Income
30.5M
EPS (Diluted)
$0.50
Free Cash Flow
15.1M
Total Assets
488.3M
Cash
201.9M
Profitability Ratios
Gross Margin
39.9%
Operating Margin
18.7%
Net Margin
17.0%
ROE
8.7%
ROA
6.2%
FCF Margin
8.4%
Balance Sheet & Liquidity
Current Ratio
3.65x
Quick Ratio
2.95x
Debt/Equity
0.00x
Debt/Assets
27.9%
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: 2026-05-06T14:46:22.092084 |
Data as of: 2026-03-31 |
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