Investment Thesis
California Resources is severely unprofitable with a $711M operating loss on $119M revenue, indicating fundamental operational distress or major non-cash charges. The company is burning cash with negative free cash flow of -$32M and faces acute liquidity stress with a current ratio of 0.55x and only $40M in reserves. Even strong 26% revenue growth cannot offset the magnitude of operational losses or address the company's deteriorating financial position.
Strengths
- Revenue growth of 26.1% YoY demonstrates market demand and operational scale expansion
- Positive operating cash flow of $99M shows capacity to generate cash from operations
- Moderate debt-to-equity ratio of 0.45x suggests reasonable leverage without extreme debt burden
Risks
- Massive operating loss of -$711M on $119M revenue indicates severe operational distress or substantial non-cash charges requiring investigation
- Negative free cash flow of -$32M combined with only $40M cash reserves creates acute liquidity crisis
- Current ratio of 0.55x and quick ratio of 0.47x indicate insufficient liquid assets to cover short-term obligations
- Negative ROE (-24.4%) and ROA (-9.9%) show rapid shareholder value destruction
- Unsustainable capex profile ($131M) relative to operating cash flow ($99M) threatens viability if not corrected
Key Metrics to Watch
- Operating income profitability return and path to breakeven
- Free cash flow inflection point and cash position sustainability
- Current and quick ratios improvement for liquidity stabilization
- Capex reduction and working capital efficiency to preserve cash
Financial Metrics
Revenue
119.0M
Net Income
-711.0M
EPS (Diluted)
$-8.02
Free Cash Flow
-32.0M
Total Assets
7.1B
Cash
40.0M
Profitability Ratios
Gross Margin
N/A
Operating Margin
-597.5%
Net Margin
-597.5%
ROE
-24.4%
ROA
-9.9%
FCF Margin
-26.9%
Balance Sheet & Liquidity
Current Ratio
0.55x
Quick Ratio
0.47x
Debt/Equity
0.45x
Debt/Assets
0.0%
Interest Coverage
N/A
Long-term Debt
1.3B
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: 2026-05-07T08:28:36.704218 |
Data as of: 2026-03-31 |
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