Investment Thesis
COHU is experiencing fundamental profitability deterioration with negative and declining net income despite 12.7% revenue growth, indicating poor operational execution and margin compression. The company's negative operating income (-8.9% margin) coupled with inability to cover debt service (interest coverage -6.9x) from operations presents a concerning financial stress signal, though positive free cash flow and strong liquidity provide a near-term cushion.
Strengths
- Revenue growth of 12.7% YoY demonstrates demand for core products
- Strong liquidity position with current ratio of 6.43x and $210.9M cash reserves
- Positive free cash flow of $8.3M despite operational losses
Risks
- Operating income deeply negative at -11.2M, indicating structural profitability problems
- Net income declining 6.4% YoY while revenue grows, showing deteriorating operational efficiency
- Interest coverage ratio of -6.9x means the company cannot service debt obligations from operations
- Net margin of -9.6% with negative ROE and ROA indicate value destruction
- Data quality concern: 112.5% gross margin is structurally impossible without extraordinary one-time adjustments
Key Metrics to Watch
- Operating margin trend - must move toward positive territory to justify debt levels
- Cash burn rate and runway given negative operating income
- Debt refinancing needs - with negative interest coverage, ability to service/refinance debt becomes critical
Financial Metrics
Revenue
125.1M
Net Income
-12.1M
EPS (Diluted)
$-0.26
Free Cash Flow
8.3M
Total Assets
1.2B
Cash
210.9M
Profitability Ratios
Gross Margin
112.5%
Operating Margin
-8.9%
Net Margin
-9.6%
ROE
-1.6%
ROA
-1.0%
FCF Margin
6.6%
Balance Sheet & Liquidity
Current Ratio
6.43x
Quick Ratio
5.31x
Debt/Equity
0.37x
Debt/Assets
0.0%
Interest Coverage
-6.88x
Long-term Debt
285.0M
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: 2026-05-06T17:18:19.923085 |
Data as of: 2026-03-28 |
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