Investment Thesis
Nelnet demonstrates exceptional revenue growth (140% YoY) with strong cash flow generation ($61.6M FCF), but flat net income growth, critically weak interest coverage (0.4x), and severely depressed returns (1.9% ROE, 0.5% ROA) signal operational distress and debt servicing concerns despite healthy operating margins.
Strengths
- Exceptional revenue growth of 140% YoY demonstrates strong market demand
- Strong operating and net margins (35.8% and 33.7%) indicate pricing power
- Positive free cash flow of $61.6M with low capital intensity (CapEx only $11.6M)
Risks
- Critical interest coverage ratio of 0.4x suggests inability to cover debt obligations from operating income
- Net income flat YoY (0.0%) despite 140% revenue growth indicates profitability deterioration and cost control issues
- Abysmal returns on equity (1.9%) and assets (0.5%) despite 2.06x leverage indicate inefficient capital deployment
- High debt-to-equity ratio of 2.06x combined with weak interest coverage signals financial stress
Key Metrics to Watch
- Interest coverage ratio trajectory and debt servicing capacity
- Return on equity and return on assets trends
- Net income growth acceleration to match revenue growth
- Operating cash flow sustainability given leverage profile
Financial Metrics
Revenue
211.2M
Net Income
71.1M
EPS (Diluted)
$1.97
Free Cash Flow
61.6M
Total Assets
14.2B
Cash
240.0M
Profitability Ratios
Gross Margin
N/A
Operating Margin
35.8%
Net Margin
33.7%
ROE
1.9%
ROA
0.5%
FCF Margin
29.1%
Balance Sheet & Liquidity
Current Ratio
N/A
Quick Ratio
N/A
Debt/Equity
2.06x
Debt/Assets
74.6%
Interest Coverage
0.39x
Long-term Debt
7.7B
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: 2026-05-09T12:05:48.864296 |
Data as of: 2026-03-31 |
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