Investment Thesis
Frequency Electronics is experiencing significant operational deterioration with declining revenue (-9.4% YoY), negative operating income (-4.7% margin), and negative free cash flow (-1.6M). With only 1.6M in cash and no clear path to profitability, the company faces revenue headwinds and operational losses that will exhaust capital if not reversed.
Strengths
- Conservative debt structure with Debt/Equity of 0.15x providing financial flexibility
- Solid current ratio of 2.29x indicating near-term liquidity capacity
- Gross margin of 29.1% remains reasonable for manufacturing segment
Risks
- Revenue declining 9.4% YoY with no stabilization evident in latest period
- Negative free cash flow of -1.6M despite positive OCF; capital expenditures exceed operating cash generation
- Critical cash position of only 1.6M with ongoing operational losses limiting runway
- Negative ROE (-1.6%) and ROA (-1.0%) indicate value destruction and poor asset utilization
- Operating losses and negative interest coverage ratio (-34.5x) indicate inability to cover financing costs from operations
Key Metrics to Watch
- Revenue stabilization and inflection back to growth trajectory
- Operating margin recovery toward positive territory
- Free cash flow generation and path to cash flow breakeven
- Cash balance adequacy relative to quarterly burn rate
Financial Metrics
Revenue
63.2M
Net Income
-903.0K
EPS (Diluted)
$-0.09
Free Cash Flow
-1.6M
Total Assets
90.7M
Cash
1.6M
Profitability Ratios
Gross Margin
29.1%
Operating Margin
-4.7%
Net Margin
-1.4%
ROE
-1.6%
ROA
-1.0%
FCF Margin
-2.5%
Balance Sheet & Liquidity
Current Ratio
2.29x
Quick Ratio
1.21x
Debt/Equity
0.15x
Debt/Assets
37.8%
Interest Coverage
-34.49x
Long-term Debt
8.4M
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: 2026-08-05T06:07:03.114585 |
Data as of: 2026-04-30 |
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