Investment Thesis
Entegris demonstrates solid underlying operational strength with healthy 46.9% gross margins and strong free cash flow generation of $141.5M. However, revenue is declining (-1.4% YoY) while net income is falling significantly faster (-19.5%), indicating operational margin compression and poor capital efficiency (ROE 2.3%, ROA 1.1%). The low interest coverage ratio of 1.4x creates vulnerability if profitability trends persist.
Strengths
- Excellent liquidity position with 3.21x current ratio and $442.7M cash reserves
- Solid free cash flow generation of $141.5M despite profitability pressure
- Healthy gross margins of 46.9% indicate core business strength
- Moderate leverage at 0.90x debt-to-equity ratio provides balance sheet stability
Risks
- Revenue declining year-over-year (-1.4%) signals top-line weakness and potential market headwinds
- Net income declining significantly faster (-19.5%) than revenue indicates operational leverage in reverse and cost control challenges
- Extremely poor returns on capital (ROE 2.3%, ROA 1.1%) demonstrate inefficient capital deployment
- Interest coverage ratio of 1.4x is dangerously low given $3.7B debt load; vulnerable to further earnings deterioration
Key Metrics to Watch
- Revenue growth trajectory - continued decline would signal structural market issues
- Operating margin trends - watch for stabilization or further compression
- Interest coverage ratio improvement - must strengthen as debt is material
- Return on equity and return on assets - critical to address capital efficiency
Financial Metrics
Revenue
811.9M
Net Income
92.0M
EPS (Diluted)
$0.60
Free Cash Flow
141.5M
Total Assets
8.5B
Cash
442.7M
Profitability Ratios
Gross Margin
46.9%
Operating Margin
17.4%
Net Margin
11.3%
ROE
2.3%
ROA
1.1%
FCF Margin
17.4%
Balance Sheet & Liquidity
Current Ratio
3.21x
Quick Ratio
2.05x
Debt/Equity
0.90x
Debt/Assets
0.0%
Interest Coverage
1.37x
Long-term Debt
3.7B
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: 2026-05-06T17:33:30.758108 |
Data as of: 2026-03-28 |
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