Investment Thesis
Constellium demonstrates solid operational performance with 15.2% revenue growth and strong operating margins (11.1%), supported by exceptional 17.8% ROE and robust interest coverage (10.5x). However, the company faces critical cash flow concerns: despite $199M net income, it generates only $1M free cash flow, suggesting significant working capital strain and questionable earnings quality that limits financial flexibility given 1.73x leverage.
Strengths
- Strong revenue growth of 15.2% YoY demonstrates market demand
- Robust operating margins of 11.1% and ROE of 17.8% indicate operational efficiency
- Excellent interest coverage of 10.5x provides substantial debt service capacity
- Moderate leverage (1.73x Debt/Equity) is manageable for industrial sector
Risks
- Critical cash flow deterioration: $1M FCF on $199M net income signals working capital stress or earnings quality issues
- Low quick ratio (0.60x) indicates potential liquidity pressure and inventory-dependent operations
- Operating cash flow of only $73M represents just 37% of net income, suggesting significant accrual buildup
- Modest cash position ($143M) insufficient to support $1.9B debt without operational cash generation
Key Metrics to Watch
- Free cash flow trend and operating cash flow conversion rate
- Working capital changes and days sales outstanding
- Debt reduction pace relative to FCF generation
Financial Metrics
Revenue
2.5B
Net Income
199.0M
EPS (Diluted)
$1.42
Free Cash Flow
1.0M
Total Assets
5.8B
Cash
143.0M
Profitability Ratios
Gross Margin
N/A
Operating Margin
11.1%
Net Margin
8.1%
ROE
17.8%
ROA
3.4%
FCF Margin
0.0%
Balance Sheet & Liquidity
Current Ratio
1.39x
Quick Ratio
0.60x
Debt/Equity
1.73x
Debt/Assets
80.6%
Interest Coverage
10.46x
Long-term Debt
1.9B
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: 2026-05-06T14:50:30.499061 |
Data as of: 2026-03-31 |
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