Investment Thesis
OPAL Fuels exhibits deteriorating fundamentals with net income down 88.2% YoY despite modest 6.8% revenue growth, signaling operational distress. The balance sheet is structurally unsound with a debt-to-equity ratio of 55.55x and only $8.2M in equity against $456.6M in long-term debt, creating significant solvency risk. Negative free cash flow of -$11.5M indicates the company is burning cash despite positive operating cash flow, unsustainable without near-term profitability improvements.
Strengths
- Positive operating cash flow of $12.9M demonstrates underlying business can generate cash
- Strong cash position of $133.2M provides near-term runway for operations and debt service
- Solid liquidity with current and quick ratios at 2.20x indicates short-term ability to meet obligations
- Revenue growth of 6.8% YoY shows some business demand persists
Risks
- Severely deteriorated profitability with net income down 88.2% YoY indicates accelerating operational problems
- Critically high leverage with 55.55x debt-to-equity ratio creates distress risk; minimal equity cushion of only $8.2M
- Negative free cash flow of -$11.5M shows cash burn at enterprise level despite positive OCF; capital intensity exceeds profitability
- Negative operating margin (-6.6%), net margin (-3.6%), ROE (-32.1%), and ROA (-0.2%) indicate value destruction across all metrics
- CapEx of $24.4M exceeds OCF of $12.9M, suggesting unsustainable capital investment relative to operations
Key Metrics to Watch
- Net income trajectory and path to profitability in next 2-4 quarters
- Free cash flow trend and whether it can turn positive without cash depletion
- Debt refinancing ability and covenant compliance given extreme leverage and deteriorating performance
Financial Metrics
Revenue
73.4M
Net Income
-2.6M
EPS (Diluted)
$-0.09
Free Cash Flow
-11.5M
Total Assets
1.1B
Cash
133.2M
Profitability Ratios
Gross Margin
N/A
Operating Margin
-6.6%
Net Margin
-3.6%
ROE
-32.1%
ROA
-0.2%
FCF Margin
-15.6%
Balance Sheet & Liquidity
Current Ratio
2.20x
Quick Ratio
2.20x
Debt/Equity
55.55x
Debt/Assets
51.7%
Interest Coverage
N/A
Long-term Debt
456.6M
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: 2026-05-13T09:01:51.645855 |
Data as of: 2026-03-31 |
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