Investment Thesis
Matador Resources faces critical financial distress with interest coverage of 0.4x indicating inability to service debt from operations, negative free cash flow of -$26.4M despite $470.5M operating cash flow, and severe liquidity stress evidenced by a 0.73x current ratio. Minimal revenue growth of 1.1% combined with negative profitability and minimal cash reserves of $30.5M create an unsustainable financial position.
Strengths
- Operating cash flow of $470.5M provides base-level cash generation in energy operations
- Moderate leverage at 0.62x debt-to-equity ratio relative to some sector peers
- Exposure to crude petroleum and natural gas sector with established production
Risks
- Interest coverage ratio of 0.4x means operating income cannot cover interest obligations
- Negative free cash flow of -$26.4M with capex exceeding operating cash generation
- Critical liquidity position with current ratio of 0.73x and only $30.5M cash against $3.5B long-term debt
- Negative profitability with net income of -$35.9M and net margin of -5.3%
- Anemic revenue growth of 1.1% YoY provides limited path to profitability improvement
- Negative return metrics (ROE -0.6%, ROA -0.3%) indicate value destruction
Key Metrics to Watch
- Interest coverage ratio trend (must improve above 1.0x for sustainability)
- Free cash flow inflection point (currently negative, needs positive reversal)
- Cash position and liquidity runway (30.5M highly constrained)
- Revenue growth acceleration and operating margin expansion
- Debt service capability and refinancing timeline
Financial Metrics
Revenue
671.6M
Net Income
-35.9M
EPS (Diluted)
$-0.29
Free Cash Flow
-26.4M
Total Assets
12.2B
Cash
30.5M
Profitability Ratios
Gross Margin
N/A
Operating Margin
7.0%
Net Margin
-5.3%
ROE
-0.6%
ROA
-0.3%
FCF Margin
-3.9%
Balance Sheet & Liquidity
Current Ratio
0.73x
Quick Ratio
0.73x
Debt/Equity
0.62x
Debt/Assets
0.0%
Interest Coverage
0.42x
Long-term Debt
3.5B
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: 2026-05-09T06:33:37.212780 |
Data as of: 2026-03-31 |
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