Investment Thesis
Darling Ingredients faces severe financial distress despite revenue growth. Interest coverage of 0.9x indicates the company cannot cover debt service from operating income, while deeply negative free cash flow of -$227.5M reveals unsustainable capital intensity. EPS collapsed 77.5% and net income was flat despite 7.4% revenue growth, signaling deteriorating profitability and margin compression.
Strengths
- Revenue growth of 7.4% YoY demonstrates market demand and operational scale
- Operating profitability of $226.8M with 14.6% operating margin shows core business can generate earnings
- Current ratio of 1.58x provides near-term liquidity cushion for operational needs
Risks
- Interest coverage ratio of 0.9x - operating income insufficient to service debt obligations, indicating financial distress
- Free cash flow of -$227.5M with capital expenditures of $380.5M far exceeding operating cash flow of $153M, creating unsustainable cash burn
- EPS plunged 77.5% YoY while net income remained flat, revealing margin compression and mounting financial charges that offset revenue gains
Key Metrics to Watch
- Interest coverage ratio - must exceed 1.5x for viability
- Free cash flow sustainability - whether capex can be reduced or OCF improved
- Net margin trend - tracking whether profitability can improve with current revenue base
Financial Metrics
Revenue
1.6B
Net Income
134.3M
EPS (Diluted)
$0.83
Free Cash Flow
-227.5M
Total Assets
10.6B
Cash
116.0M
Profitability Ratios
Gross Margin
26.1%
Operating Margin
14.6%
Net Margin
8.7%
ROE
2.8%
ROA
1.3%
FCF Margin
-14.7%
Balance Sheet & Liquidity
Current Ratio
1.58x
Quick Ratio
1.03x
Debt/Equity
0.83x
Debt/Assets
53.5%
Interest Coverage
0.87x
Long-term Debt
4.1B
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: 2026-05-09T06:44:48.164210 |
Data as of: 2026-04-04 |
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