Investment Thesis
CPI Aerostructures faces critical operational distress with negative operating cash flow of -$424.7K and interest coverage ratio of 0.8x, indicating the business cannot service its $10M debt from operations. Combined with a dangerously low cash position of $1.0M and subpar returns on equity (4.5%) and assets (1.6%), the company exhibits unsustainable financial dynamics requiring immediate operational turnaround.
Strengths
- Gross margin of 25.8% demonstrates pricing power in aerospace component market
- Current ratio of 1.98x and quick ratio of 1.95x indicate adequate near-term liquidity
- Moderate debt-to-equity ratio of 0.37x provides some financial flexibility relative to liability burden
Risks
- Negative operating cash flow of -$424.7K indicates core business operations are not cash generative
- Interest coverage ratio of 0.8x means operating income fails to cover interest expense obligations
- Cash position of $1.0M creates acute solvency risk given $10M long-term debt and negative cash burn
- Severely depressed returns on equity (4.5%) and assets (1.6%) reveal poor capital efficiency
- Negative free cash flow of -$477.8K unsustainable without external financing or major operational improvement
Key Metrics to Watch
- Operating cash flow inflection - critical to achieve positive OCF within 1-2 quarters
- Interest coverage ratio - must exceed 1.5x minimum for debt sustainability
- Cash runway - current burn rate with $1.0M position requires immediate action to avoid liquidity event
Financial Metrics
Revenue
17.4M
Net Income
1.2M
EPS (Diluted)
$0.09
Free Cash Flow
-477.8K
Total Assets
77.3M
Cash
1.0M
Profitability Ratios
Gross Margin
25.8%
Operating Margin
10.5%
Net Margin
7.1%
ROE
4.5%
ROA
1.6%
FCF Margin
-2.8%
Balance Sheet & Liquidity
Current Ratio
1.98x
Quick Ratio
1.95x
Debt/Equity
0.37x
Debt/Assets
64.7%
Interest Coverage
0.80x
Long-term Debt
10.0M
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: 2026-05-23T08:08:57.925504 |
Data as of: 2026-03-31 |
Powered by Claude AI