Investment Thesis
Orrstown Financial faces severe fundamental deterioration with revenue collapsing 87.8% year-over-year, indicating significant business contraction or major operational disruption. The interest coverage ratio of 0.8x reveals the company cannot cover interest expenses from operating income, raising solvency concerns despite positive net income driven by potential one-time gains. Weak returns (ROE 3.6%, ROA 0.4%) and the suspicious disconnect between plummeting revenue and surging net income signal structural problems requiring urgent clarification.
Strengths
- Low leverage (Debt/Equity 0.07x) reduces bankruptcy risk
- Positive free cash flow of $25.1M with strong 33.8% FCF margin provides liquidity buffer
- Adequate cash position ($161.1M) exceeds long-term debt ($40.0M)
Risks
- Revenue collapse of 87.8% YoY indicates severe business deterioration or operational failure
- Interest coverage ratio of 0.8x means operating income cannot cover interest expenses—unsustainable long-term
- Extremely weak returns (ROA 0.4%, ROE 3.6%) suggest asset base is not generating adequate profits; abnormal revenue-to-net-income relationship indicates potential one-time gains masking structural decline
Key Metrics to Watch
- Q2 2026 revenue trends to confirm whether 87.8% decline is temporary or structural
- Interest coverage ratio trajectory and net interest margin sustainability
- Asset quality metrics (non-performing loans, loan loss reserves) for banking health indicators
Financial Metrics
Revenue
74.4M
Net Income
21.8M
EPS (Diluted)
$1.12
Free Cash Flow
25.1M
Total Assets
5.6B
Cash
161.1M
Profitability Ratios
Gross Margin
N/A
Operating Margin
37.0%
Net Margin
29.3%
ROE
3.6%
ROA
0.4%
FCF Margin
33.8%
Balance Sheet & Liquidity
Current Ratio
N/A
Quick Ratio
N/A
Debt/Equity
0.07x
Debt/Assets
89.2%
Interest Coverage
0.83x
Long-term Debt
40.0M
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: 2026-05-09T06:20:09.246327 |
Data as of: 2026-03-31 |
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