Investment Thesis
Quest Diagnostics exhibits severe data integrity red flags—including an impossible 125.5% gross margin and implausible 84,784% revenue growth—that undermine analytical reliability. Underlying fundamentals reveal weak returns (3.4% ROE, 1.5% ROA), tight liquidity (1.08x quick ratio), and anemic free cash flow generation (5.7% FCF margin), suggesting operational inefficiency or significant accounting anomalies.
Strengths
- Reasonable operating margin of 13.8% indicates core business profitability
- Manageable leverage with 0.70x debt-to-equity ratio
- Adequate interest coverage of 4.2x provides debt service cushion
Risks
- Gross margin exceeding 100% is mathematically impossible—indicates critical data quality issues
- Extremely low ROE (3.4%) and ROA (1.5%) suggest severe asset underutilization or accounting treatment problems
- Tight quick ratio (1.08x) and weak FCF margin (5.7%) indicate constrained liquidity and poor cash generation
Key Metrics to Watch
- Gross margin (validate data integrity—must be <100%)
- Revenue reconciliation and YoY growth normalization
- Return on equity trend and operational efficiency drivers
Financial Metrics
Revenue
2.9B
Net Income
252.0M
EPS (Diluted)
$2.24
Free Cash Flow
164.0M
Total Assets
16.7B
Cash
393.0M
Profitability Ratios
Gross Margin
125.5%
Operating Margin
13.8%
Net Margin
8.7%
ROE
3.4%
ROA
1.5%
FCF Margin
5.7%
Balance Sheet & Liquidity
Current Ratio
1.18x
Quick Ratio
1.08x
Debt/Equity
0.70x
Debt/Assets
0.0%
Interest Coverage
4.16x
Long-term Debt
5.2B
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: 2026-04-29T13:16:13.968518 |
Data as of: 2026-03-31 |
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