Investment Thesis
IDACORP demonstrates strong operational profitability (20.3% operating margin) with solid cash generation from operations ($602M), but faces significant headwinds from negative free cash flow (-$578M) driven by substantial capital expenditures that exceed operating cash flow. The combination of stagnant revenue/earnings growth, below-1.0 current ratio, weak ROE (9.1%), and tight interest coverage (2.1x) suggests the utility is over-leveraging infrastructure investment without adequate earnings growth to support shareholder returns.
Strengths
- Strong operating margin of 20.3% and net margin of 18.5% indicating excellent cost control for regulated utility
- Operating cash flow of $602M provides stable foundation for debt service and dividend sustainability
- Moderate debt-to-equity ratio of 0.93x demonstrates reasonable leverage profile within utility norms
Risks
- Negative free cash flow of -$578M driven by $1.2B capex exceeding operating cash generation signals unsustainable capital structure requiring external financing
- Current ratio of 0.93x indicates emerging liquidity stress and working capital constraints
- Stagnant fundamentals with revenue declining 1.2% YoY and net income flat YoY coupled with weak ROE of 9.1% suggests limited shareholder value creation
Key Metrics to Watch
- Free cash flow trend - critical to assess if capex intensity moderates and cash generation improves
- Revenue growth rate - currently negative, needs to stabilize for earnings expansion
- Current ratio and working capital position - must return above 1.0x for adequate liquidity buffer
Financial Metrics
Revenue
1.7B
Net Income
323.5M
EPS (Diluted)
$5.90
Free Cash Flow
-577.5M
Total Assets
10.2B
Cash
215.7M
Profitability Ratios
Gross Margin
N/A
Operating Margin
20.3%
Net Margin
18.5%
ROE
9.1%
ROA
3.2%
FCF Margin
-33.1%
Balance Sheet & Liquidity
Current Ratio
0.93x
Quick Ratio
0.93x
Debt/Equity
0.93x
Debt/Assets
0.0%
Interest Coverage
2.10x
Long-term Debt
3.3B
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: 2026-04-11T15:03:27.888141 |
Data as of: 2025-12-31 |
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