Investment Thesis
MGE Energy exhibits concerning fundamentals with declining revenue (-2.6% YoY), negative free cash flow (-$20.4M), and deteriorating profitability metrics, despite positive operating cash flow and moderate leverage ratios typical of regulated utilities. The extremely low cash position ($9.5M) combined with capex exceeding operations ($101.1M) creates liquidity pressure that warrants caution until capital structure and revenue trends stabilize.
Strengths
- Positive operating cash flow of $80.7M provides operational liquidity foundation
- Moderate leverage with 0.65x debt-to-equity ratio and 3.8x interest coverage typical for regulated utility
- EPS growth of 11.7% YoY despite flat net income indicates disciplined capital allocation
Risks
- Negative free cash flow indicates company cannot fund capex from operations and requires external capital
- Declining revenue (-2.6% YoY) contradicts utility sector stability expectations and growth prospects
- Severely depressed cash position of $9.5M relative to $3.2B assets and $880.3M debt creates refinancing vulnerability
- Abnormally negative profit margins suggest either data quality issues or significant non-recurring charges masking underlying performance
Key Metrics to Watch
- Free cash flow trajectory and capex sustainability going forward
- Revenue stabilization or recovery in upcoming quarters
- Cash position trend and debt refinancing activities
- Operating margin normalization and profitability recovery
Financial Metrics
Revenue
-9.8M
Net Income
48.5M
EPS (Diluted)
$1.32
Free Cash Flow
-20.4M
Total Assets
3.2B
Cash
9.5M
Profitability Ratios
Gross Margin
N/A
Operating Margin
-542.1%
Net Margin
-494.5%
ROE
3.6%
ROA
1.5%
FCF Margin
208.5%
Balance Sheet & Liquidity
Current Ratio
1.15x
Quick Ratio
1.15x
Debt/Equity
0.65x
Debt/Assets
0.0%
Interest Coverage
3.81x
Long-term Debt
880.3M
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: 2026-05-08T11:17:48.108227 |
Data as of: 2026-03-31 |
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