Investment Thesis
EPRT demonstrates exceptional cash flow generation (62% FCF margin) and strong operational margins (56.5%), supported by solid 24.8% revenue growth and reasonable leverage (0.60x D/E). However, the sharp divergence between revenue growth (+24.8% YoY) and net income growth (+0.4% YoY) signals deteriorating profitability quality, while critically low capital returns (ROE 1.4%, ROA 0.8%) indicate poor capital deployment efficiency.
Strengths
- Exceptional free cash flow generation with 62% FCF margin and $98.5M annual FCF
- Strong operating margins of 56.5% and net margins of 37.7% demonstrate operational efficiency
- Healthy interest coverage ratio of 5.7x and moderate leverage at 0.60x debt-to-equity
- Solid revenue growth of 24.8% YoY showing business expansion
Risks
- Net income growth severely lagging revenue growth (0.4% vs 24.8%) indicates profitability deterioration or margin compression at lower levels
- Critically low returns on equity (1.4%) and assets (0.8%) signal poor capital efficiency and deployment challenges
- Dangerously low cash position of $15.2M relative to $2.6B long-term debt creates liquidity vulnerability
- EPS growth (11.3%) disconnected from net income growth suggests dilution or non-recurring benefits masking operational challenges
Key Metrics to Watch
- Net income growth trajectory relative to revenue growth to confirm profitability stabilization
- Return on equity and return on assets improvement indicating better capital deployment
- Cash position and operating cash flow sustainability to assess refinancing risk
Financial Metrics
Revenue
158.8M
Net Income
59.8M
EPS (Diluted)
$0.28
Free Cash Flow
98.5M
Total Assets
7.2B
Cash
15.2M
Profitability Ratios
Gross Margin
N/A
Operating Margin
56.5%
Net Margin
37.7%
ROE
1.4%
ROA
0.8%
FCF Margin
62.0%
Balance Sheet & Liquidity
Current Ratio
N/A
Quick Ratio
N/A
Debt/Equity
0.60x
Debt/Assets
38.5%
Interest Coverage
5.75x
Long-term Debt
2.6B
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: 2026-04-29T13:50:24.244406 |
Data as of: 2026-03-31 |
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