Investment Thesis
Inspired Entertainment exhibits critical balance sheet weakness with negative stockholders equity of -$12.4M, indicating technical insolvency. While the company generates strong operating cash flow ($26.7M) and maintains adequate short-term liquidity, it is unprofitable at the net income level (-$500K) with weak revenue growth (2.4% YoY) and a deteriorating earnings trajectory. The substantial debt burden ($326.3M long-term) relative to the asset base creates material financial distress risk.
Strengths
- Strong operating cash flow of $26.7M and excellent FCF margin of 40.2%
- Adequate short-term liquidity with 2.08x current ratio and $41.1M cash position
- Positive operating income of $9.2M with 16.1% operating margin
Risks
- Negative stockholders equity of -$12.4M indicates technical balance sheet insolvency
- Net loss of -$500K and negative net margin of -0.9% despite operating profitability
- Excessive leverage with $326.3M long-term debt and total liabilities exceeding total assets
- Anemic revenue growth of 2.4% YoY and sharply deteriorating diluted EPS down 126.1% YoY
Key Metrics to Watch
- Net income recovery and path to profitability
- Stockholders equity trajectory and debt reduction
- Revenue growth acceleration and operating cash flow sustainability
- Debt refinancing needs and covenant compliance
Financial Metrics
Revenue
57.2M
Net Income
-500.0K
EPS (Diluted)
$-0.02
Free Cash Flow
23.0M
Total Assets
421.2M
Cash
41.1M
Profitability Ratios
Gross Margin
N/A
Operating Margin
16.1%
Net Margin
-0.9%
ROE
N/A
ROA
-0.1%
FCF Margin
40.2%
Balance Sheet & Liquidity
Current Ratio
2.08x
Quick Ratio
1.85x
Debt/Equity
N/A
Debt/Assets
102.9%
Interest Coverage
N/A
Long-term Debt
326.3M
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: 2026-05-09T11:14:57.744762 |
Data as of: 2026-03-31 |
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