Investment Thesis
Electromed demonstrates exceptional fundamental strength with 78.5% gross margins, 14.5% net margins, and solid free cash flow generation of $5.6M. The balance sheet is fortress-like with minimal debt (0.02x D/E), $17M cash reserves, and 4.91x current ratio, indicating strong financial stability. However, lack of year-over-year revenue visibility limits assessment of growth sustainability.
Strengths
- Exceptional profitability: 78.5% gross margin, 18.5% operating margin, 14.5% net margin with 16.1% ROE
- Fortress balance sheet: minimal leverage (0.02x D/E), $17M cash position, liabilities only $10.3M against $59.5M assets
- Strong free cash flow generation: $5.6M FCF with 10.4% margin demonstrates quality earnings and operational efficiency
Risks
- Lack of YoY revenue and net income comparisons prevents assessment of growth momentum and sustainability
- Operating cash flow ($6.7M) lags net income ($7.9M), signaling potential working capital pressures or earnings quality concerns
- Zero insider Form 4 filings in 90 days suggests limited management confidence or execution certainty at current levels
Key Metrics to Watch
- Quarter-over-quarter and year-over-year revenue growth trends to validate organic expansion
- Operating cash flow conversion and working capital efficiency as revenue scales
- Capital allocation strategy: dividend, buybacks, or debt reduction given strong FCF and minimal leverage
Financial Metrics
Revenue
54.4M
Net Income
7.9M
EPS (Diluted)
$0.91
Free Cash Flow
5.6M
Total Assets
59.5M
Cash
17.0M
Profitability Ratios
Gross Margin
78.5%
Operating Margin
18.5%
Net Margin
14.5%
ROE
16.1%
ROA
13.3%
FCF Margin
10.4%
Balance Sheet & Liquidity
Current Ratio
4.91x
Quick Ratio
4.59x
Debt/Equity
0.02x
Debt/Assets
17.3%
Interest Coverage
497.67x
Long-term Debt
1.1M
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: 2026-05-14T08:13:37.920537 |
Data as of: 2026-03-31 |
Powered by Claude AI