Investment Thesis
LSB Industries demonstrates solid revenue growth (17.8% YoY) and strong free cash flow generation (20.5% FCF margin) with excellent liquidity, but profitability trends are concerning with net income flat despite topline expansion. Extremely low returns on equity (3.6%) and ROA (1.7%) combined with significant debt burden ($441.2M) indicate capital deployment challenges that offset positive operational cash generation.
Strengths
- Strong revenue growth of 17.8% YoY demonstrating market demand and competitive positioning
- Excellent free cash flow generation of $34.8M with 20.5% FCF margin indicating quality earnings and operational efficiency
- Robust liquidity position with current ratio of 3.07x and quick ratio of 2.85x providing financial flexibility
Risks
- Net income flat at +0.0% YoY despite 17.8% revenue growth signals margin compression or rising operational expenses eroding profitability
- Critically low return on equity of 3.6% and ROA of 1.7% indicate poor capital efficiency and shareholder value creation
- High debt burden of $441.2M with moderate interest coverage of 3.3x limits financial flexibility and increases refinancing risk
Key Metrics to Watch
- Net income growth trajectory and operating margin trends relative to revenue growth
- Return on equity and asset returns - critical indicators of capital deployment effectiveness
- Debt reduction progress and interest coverage ratio given leverage constraints
Financial Metrics
Revenue
169.5M
Net Income
19.7M
EPS (Diluted)
$0.27
Free Cash Flow
34.8M
Total Assets
1.2B
Cash
20.6M
Profitability Ratios
Gross Margin
21.1%
Operating Margin
13.7%
Net Margin
11.6%
ROE
3.6%
ROA
1.7%
FCF Margin
20.5%
Balance Sheet & Liquidity
Current Ratio
3.07x
Quick Ratio
2.85x
Debt/Equity
0.81x
Debt/Assets
0.0%
Interest Coverage
3.25x
Long-term Debt
441.2M
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: 2026-05-06T15:37:32.391995 |
Data as of: 2026-03-31 |
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