Investment Thesis
Interparfums exhibits deteriorating operational fundamentals despite modest revenue growth, with net income declining 19.1% YoY indicating significant margin compression. Critical cash flow metrics—nearly zero operating cash flow and negative free cash flow—suggest structural profitability challenges that cannot be sustained, despite a fortress balance sheet.
Strengths
- Strong gross margin of 65.1% and operating margin of 21.5% demonstrate pricing power in fragrance/cosmetics
- Fortress balance sheet with 0.12x debt/equity ratio and $79.8M cash provides financial flexibility and downside protection
- Excellent liquidity ratios (3.26x current, 2.05x quick) ensure ability to meet near-term obligations
Risks
- Net income declining 19.1% YoY while revenue grows only 2.5% signals dangerous margin compression and deteriorating profitability
- Operating cash flow of $85K on $344.9M revenue is alarmingly low, with negative free cash flow of -$1.3M indicating the company is consuming rather than generating cash
- Severely depressed returns on capital (4.9% ROE, 2.8% ROA) despite acceptable operating margins suggests capital inefficiency or unproductive asset base
Key Metrics to Watch
- Net profit margin trend—critical to understand whether margin compression continues or stabilizes
- Operating cash flow magnitude—current $85K figure needs validation; sustainability of FCF critical
- Return on equity trajectory—4.9% ROE must improve to justify capital employed in the business
Financial Metrics
Revenue
344.9M
Net Income
43.4M
EPS (Diluted)
$1.35
Free Cash Flow
-1.3M
Total Assets
1.5B
Cash
79.8M
Profitability Ratios
Gross Margin
65.1%
Operating Margin
21.5%
Net Margin
12.6%
ROE
4.9%
ROA
2.8%
FCF Margin
-0.4%
Balance Sheet & Liquidity
Current Ratio
3.26x
Quick Ratio
2.05x
Debt/Equity
0.12x
Debt/Assets
0.0%
Interest Coverage
41.03x
Long-term Debt
107.2M
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: 2026-05-06T20:32:45.890153 |
Data as of: 2026-03-31 |
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