Investment Thesis
Carlisle Companies exhibits deteriorating operational fundamentals despite adequate liquidity. Net income declined 43.5% YoY with minimal revenue growth of 0.3%, while critically, the company generated negative free cash flow of -73M despite reported profitability, indicating unsustainable cash dynamics and potential structural business challenges.
Strengths
- Exceptional liquidity position with 3.38x current ratio and 2.58x quick ratio
- Substantial cash reserves of 771.3M providing financial flexibility
- Moderate leverage at 1.75x debt-to-equity ratio, not excessive for the sector
Risks
- Critical negative free cash flow of -73M (-6.9% FCF margin) despite positive net income signals cash conversion problems and sustainability concerns
- Sharp net income decline of 43.5% YoY with EPS down 38.5% indicates deteriorating profitability trend
- Stagnant revenue growth of only 0.3% YoY combined with low capital returns (ROE 7.7%, ROA 2.1%) suggests business is underperforming
- Interest coverage of only 3.2x with 2.9B long-term debt provides limited cushion for further earnings deterioration
- Anomalous 155.3% gross margin indicates potential data quality issues or unusual accounting adjustments requiring clarification
Key Metrics to Watch
- Operating cash flow trend and path to positive FCF generation
- Net income stabilization versus continued decline trajectory
- Revenue growth acceleration from current 0.3% baseline
- Debt service capacity and interest coverage ratio movements
Financial Metrics
Revenue
1.1B
Net Income
127.7M
EPS (Diluted)
$3.10
Free Cash Flow
-73.0M
Total Assets
6.0B
Cash
771.3M
Profitability Ratios
Gross Margin
155.3%
Operating Margin
17.1%
Net Margin
12.1%
ROE
7.7%
ROA
2.1%
FCF Margin
-6.9%
Balance Sheet & Liquidity
Current Ratio
3.38x
Quick Ratio
2.58x
Debt/Equity
1.75x
Debt/Assets
0.0%
Interest Coverage
3.16x
Long-term Debt
2.9B
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: 2026-04-29T14:43:36.525397 |
Data as of: 2026-03-31 |
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