Investment Thesis
Fat Brands exhibits critical financial distress with negative stockholders' equity of -$585.8M, severe liquidity constraints (0.03x current ratio), and persistent operating losses despite 23.4% revenue growth. The company is burning cash at an alarming rate (-$63.9M FCF) while carrying $1.3B in long-term debt, indicating structural insolvency and imminent default risk.
Strengths
- Revenue growth of 23.4% YoY demonstrates operational traction in core business
- Slight net income improvement of 3.9% YoY suggests marginal cost control initiatives
- Total assets of $1.2B provide some asset backing despite equity deficiency
Risks
- Negative stockholders' equity of -$585.8M signals technical insolvency and potential bankruptcy filing
- Critical liquidity crisis with current ratio of 0.03x and only $2.1M cash against $1.8B total liabilities
- Severe cash burn with -$54.7M operating cash flow and -$63.9M free cash flow indicating inability to fund operations
- Operating margin of -9.7% and net margin of -36.9% demonstrate unprofitable core business
- Interest coverage of -21.7x shows company cannot service debt obligations from operations
- Long-term debt of $1.3B with negative cash generation creates imminent default risk
Key Metrics to Watch
- Stockholders' equity trajectory and path to positive equity
- Operating cash flow trend and return to positive cash generation
- Debt covenant compliance and refinancing negotiations with creditors
- Operating margin improvement and path to profitability
- Liquidity position and cash runway months remaining
Financial Metrics
Revenue
428.9M
Net Income
-158.4M
EPS (Diluted)
$-9.30
Free Cash Flow
-63.9M
Total Assets
1.2B
Cash
2.1M
Profitability Ratios
Gross Margin
N/A
Operating Margin
-9.7%
Net Margin
-36.9%
ROE
N/A
ROA
-13.1%
FCF Margin
-14.9%
Balance Sheet & Liquidity
Current Ratio
0.03x
Quick Ratio
0.03x
Debt/Equity
N/A
Debt/Assets
149.0%
Interest Coverage
-21.71x
Long-term Debt
1.3B
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: 2026-03-24T17:34:11.148883 |
Data as of: 2025-09-28 |
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