Investment Thesis
Eagle Materials demonstrates solid fundamentals with exceptional operating margins (23.5%), strong profitability (18.4% net margin), outstanding liquidity (3.66x current ratio), and robust ROE (28.7%). However, the company faces margin compression with net income declining 8.5% YoY despite 2.1% revenue growth, signaling cost pressures that require resolution to justify higher valuations.
Strengths
- Exceptional operating margins (23.5%) and net profitability (18.4%) with strong ROE of 28.7%
- Outstanding liquidity and financial stability (Current Ratio 3.66x, Quick Ratio 2.09x) with fortress-level interest coverage of 11.7x
- Solid free cash flow generation of $197.4M with disciplined capital deployment and manageable debt service
Risks
- Net income and EPS declining (-8.5% and -4.4% YoY) despite revenue growth, indicating significant margin compression and rising cost pressures
- Anemic revenue growth of 2.1% in a cyclical cement industry with limited organic growth momentum
- Moderate leverage ratio (1.21x Debt/Equity) constrains financial flexibility if industry conditions deteriorate further
Key Metrics to Watch
- Gross margin and operating margin trends - whether cost inflation stabilizes or accelerates
- Revenue growth trajectory - organic growth acceleration critical to demonstrate market demand
- Free cash flow sustainability - ability to maintain positive FCF generation amid cost headwinds
Financial Metrics
Revenue
2.3B
Net Income
423.8M
EPS (Diluted)
$13.16
Free Cash Flow
197.4M
Total Assets
3.8B
Cash
297.9M
Profitability Ratios
Gross Margin
28.3%
Operating Margin
23.5%
Net Margin
18.4%
ROE
28.7%
ROA
11.0%
FCF Margin
8.6%
Balance Sheet & Liquidity
Current Ratio
3.66x
Quick Ratio
2.09x
Debt/Equity
1.21x
Debt/Assets
61.6%
Interest Coverage
11.66x
Long-term Debt
1.8B
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: 2026-05-21T07:42:25.809842 |
Data as of: 2026-03-31 |
Powered by Claude AI