Investment Thesis
Lantronix is unprofitable with zero revenue growth and deteriorating earnings (-141.7% EPS decline YoY), indicating fundamental operational distress despite a strong balance sheet. While the company generates positive free cash flow and maintains low leverage, the negative operating margins (-4.2%), inability to cover interest from operations, and complete absence of growth trajectory signal declining fundamental health.
Strengths
- Strong liquidity position with 2.74x current ratio and $23.5M cash providing financial flexibility
- Conservative capital structure with 0.12x debt-to-equity ratio limiting financial risk
- Positive free cash flow generation of $7.5M despite operating losses, demonstrating asset conversion capability
Risks
- Unprofitable operations with negative operating margin (-4.2%) and net margin (-4.4%) indicating structural cost issues
- Zero revenue growth (0.0% YoY) reflects complete business stagnation with no organic expansion
- Deteriorating profitability with EPS collapsing -141.7% YoY and negative interest coverage of -4.1x limiting debt servicing capacity
- Unusual divergence between negative net income and positive operating cash flow suggests accounting adjustments masking operational reality
Key Metrics to Watch
- Operating margin trajectory and path to profitability
- Revenue growth acceleration and market demand signals
- Quarterly SG&A expense trends and operational efficiency improvements
- Free cash flow sustainability and cash burn rate
Financial Metrics
Revenue
89.7M
Net Income
-3.9M
EPS (Diluted)
$-0.10
Free Cash Flow
7.5M
Total Assets
120.0M
Cash
23.5M
Profitability Ratios
Gross Margin
43.8%
Operating Margin
-4.2%
Net Margin
-4.4%
ROE
-5.3%
ROA
-3.3%
FCF Margin
8.4%
Balance Sheet & Liquidity
Current Ratio
2.74x
Quick Ratio
1.80x
Debt/Equity
0.12x
Debt/Assets
38.0%
Interest Coverage
-4.05x
Long-term Debt
8.7M
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: 2026-05-08T11:06:53.026122 |
Data as of: 2026-03-31 |
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