Investment Thesis
IDT Corp exhibits severe red flags despite a fortress-like balance sheet. The 19999.5% revenue growth is accompanied by declining net income, operating cash flow significantly below net income, and a paltry 3.1% FCF margin—indicating profound earnings quality concerns. Structural headwinds in mature telecom sector combined with deteriorating profitability trends outweigh strong liquidity and negligible debt.
Strengths
- Minimal leverage with 0.02x debt-to-equity and only $6.4M long-term debt
- Substantial cash position of $215M (31% of total assets) provides operational flexibility
- Healthy liquidity ratios (1.92x current and quick ratio) support short-term obligations
Risks
- Operating cash flow ($46.7M) below reported net income ($64.9M) signals severe earnings quality deterioration and potential accounting manipulation
- Free cash flow margin of only 3.1% on $959M revenue despite purported 20000%+ YoY growth indicates significant cash leakage and unsustainable growth claims
- Net income declined 6.2% YoY while revenue allegedly grew 20000%—gross margin compression and cost structure problems suggest business model stress
- Mature telecom sector (SIC 4813) facing secular decline; company operates in structurally challenged market segment
- Revenue growth anomaly lacks contextual explanation—likely driven by M&A or accounting reclassification rather than organic strength
Key Metrics to Watch
- Operating cash flow trend and reconciliation to net income (investigate quality of earnings)
- Free cash flow conversion and sustainability given revenue growth sustainability questions
- Gross margin trajectory and cost structure evolution in competitive telecom market
Financial Metrics
Revenue
959.0M
Net Income
64.9M
EPS (Diluted)
$2.59
Free Cash Flow
29.6M
Total Assets
698.0M
Cash
215.0M
Profitability Ratios
Gross Margin
37.7%
Operating Margin
9.2%
Net Margin
6.8%
ROE
18.1%
ROA
9.3%
FCF Margin
3.1%
Balance Sheet & Liquidity
Current Ratio
1.92x
Quick Ratio
1.92x
Debt/Equity
0.02x
Debt/Assets
44.4%
Interest Coverage
N/A
Long-term Debt
6.4M
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: 2026-06-10T07:31:12.796781 |
Data as of: 2026-04-30 |
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