Investment Thesis
FOX Factory is fundamentally deteriorating despite 5.3% revenue growth, with negative operating cash flow (-$16.1M), negative free cash flow (-$21.5M), and an interest coverage ratio of 0.5x indicating inability to service $512.2M in debt from operations. The company is unprofitable ($15M net loss) with operating margins collapsed to 1.6%, suggesting structural issues in operations or margins that cannot be reversed through revenue growth alone.
Strengths
- Gross margin of 28.9% indicates pricing power and product-market fit in core business
- Strong liquidity position with 2.99x current ratio provides short-term buffer
- Moderate leverage at 0.78x debt/equity maintains some financial flexibility
Risks
- Negative operating cash flow (-$16.1M) indicates cash burn from core operations, not temporary
- Interest coverage of 0.5x means company cannot service debt from operating income; existential solvency risk
- Free cash flow of -$21.5M combined with $53.9M cash creates 2-3 year runway until financial crisis if trends continue
- Operating margin collapse to 1.6% despite revenue growth signals cost structure breakdown or margin pressure that revenue cannot overcome
Key Metrics to Watch
- Operating cash flow trend (critical: must return positive)
- Interest coverage ratio improvement toward >1.5x minimum
- Operating margin recovery from 1.6% floor
- Cash balance depletion rate and debt refinancing needs
Financial Metrics
Revenue
368.7M
Net Income
-15.0M
EPS (Diluted)
$-0.36
Free Cash Flow
-21.5M
Total Assets
1.7B
Cash
53.9M
Profitability Ratios
Gross Margin
28.9%
Operating Margin
1.6%
Net Margin
-4.1%
ROE
-2.3%
ROA
-0.9%
FCF Margin
-5.8%
Balance Sheet & Liquidity
Current Ratio
2.99x
Quick Ratio
1.52x
Debt/Equity
0.78x
Debt/Assets
60.4%
Interest Coverage
0.50x
Long-term Debt
512.2M
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: 2026-05-09T10:41:06.827662 |
Data as of: 2026-04-03 |
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