Investment Thesis
MediaAlpha demonstrates strong revenue growth of 28.8% YoY, but this is severely undermined by critical financial distress signals: negative operating cash flow (-$1.6M) despite reported profitability, extreme leverage with 85.29x debt-to-equity ratio, and liabilities exceeding total assets. The disconnect between accounting profits and cash generation indicates unsustainable fundamentals.
Strengths
- Strong revenue growth of 28.8% YoY demonstrates market traction and customer demand
- Positive operating income ($22.4M) and net income ($11.5M) with improving diluted EPS (+25.8% YoY)
- Adequate interest coverage ratio of 10.2x and acceptable liquidity ratios (1.46x current/quick)
Risks
- Negative operating cash flow (-$1.6M) signals inability to convert profits into cash from core operations, indicating potential accounting quality issues
- Extreme financial leverage with 85.29x debt-to-equity ratio and liabilities ($396.8M) exceeding assets ($367.7M) by $29.1M
- Thin profit margins (7.2% operating, 3.7% net) combined with negative FCF leave no buffer for operational disruption or debt service challenges
Key Metrics to Watch
- Operating cash flow trajectory (critical inflection point)
- Net debt reduction and refinancing ability under extreme leverage
- Gross profit margin sustainability and cost structure efficiency
Financial Metrics
Revenue
310.0M
Net Income
11.5M
EPS (Diluted)
$0.21
Free Cash Flow
-1.6M
Total Assets
367.7M
Cash
26.1M
Profitability Ratios
Gross Margin
N/A
Operating Margin
7.2%
Net Margin
3.7%
ROE
598.2%
ROA
3.1%
FCF Margin
-0.5%
Balance Sheet & Liquidity
Current Ratio
1.46x
Quick Ratio
1.46x
Debt/Equity
85.29x
Debt/Assets
107.9%
Interest Coverage
10.17x
Long-term Debt
163.5M
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: 2026-05-06T15:39:58.469077 |
Data as of: 2026-03-31 |
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