Investment Thesis
Despite 19.7% YoY revenue growth and reasonable operating margins (24.7%), FMNB exhibits critical fundamental weaknesses: net income is completely flat YoY (0% growth) despite revenue expansion, return metrics are dangerously depressed (ROE 2.1%, ROA 0.2%), and an interest coverage ratio of 0.4x indicates operating income cannot sustain interest expenses, signaling an unsustainable capital structure and deteriorating shareholder value.
Strengths
- Strong revenue growth of 19.7% YoY demonstrates business expansion
- Operating margin of 24.7% and net margin of 20.1% show reasonable operational efficiency
- Conservative leverage with 0.12x debt-to-equity ratio provides balance sheet stability
Risks
- Interest coverage ratio of 0.4x is critically unsustainable - operating income cannot cover interest obligations
- Return on Equity (2.1%) and Return on Assets (0.2%) are dangerously low and well below peer expectations
- Net income growth of 0% YoY despite 19.7% revenue growth indicates severe margin compression or cost escalation
Key Metrics to Watch
- Interest coverage ratio - must improve above 1.0x minimum for operational viability
- Return on Equity - needs marked improvement from critically depressed 2.1% level
- Net income growth alignment with revenue - critical to validate profitability improvement
Financial Metrics
Revenue
80.8M
Net Income
16.3M
EPS (Diluted)
$0.36
Free Cash Flow
7.1M
Total Assets
7.2B
Cash
26.6M
Profitability Ratios
Gross Margin
N/A
Operating Margin
24.7%
Net Margin
20.1%
ROE
2.1%
ROA
0.2%
FCF Margin
8.7%
Balance Sheet & Liquidity
Current Ratio
N/A
Quick Ratio
N/A
Debt/Equity
0.12x
Debt/Assets
89.3%
Interest Coverage
0.41x
Long-term Debt
94.1M
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: 2026-05-08T06:01:31.700595 |
Data as of: 2026-03-31 |
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