Investment Thesis
Ranpak is experiencing severe operational deterioration masked by headline revenue growth; despite 18.7% YoY sales expansion, the company is unprofitable at the operating level with -3.8% margins and cannot service debt from operations (interest coverage -0.6x). The business model is structurally challenged: capital intensity (55.3M capex) far exceeds operating cash generation (4.4M), resulting in -50.9M negative free cash flow, which is unsustainable and signals the company is burning shareholder capital to fund growth.
Strengths
- Revenue growing 18.7% year-over-year indicates market demand
- Gross margin of 34.5% is reasonable for converted paper products sector
- Liquidity position adequate with 1.73x current ratio and 48.5M cash on hand
Risks
- Operating losses with -3.8% operating margin despite revenue growth signals margin compression and execution issues
- Negative free cash flow of -50.9M with -50.3% FCF margin is unsustainable; company burns cash despite positive operating cash flow
- Interest coverage ratio of -0.6x means company cannot service 403.1M long-term debt from operations, creating financial stress
- EPS deteriorating sharply at -73.1% YoY decline indicates fundamental business weakening
- Capital expenditure requirements (55.3M) substantially exceed operating cash generation (4.4M) in a low-margin business, revealing structural profitability challenges
Key Metrics to Watch
- Operating margin trend - critical inflection point if reaches positive territory
- Free cash flow and cash burn rate - sustainability of liquidity at current capex levels
- Debt service coverage ratio and interest coverage - ability to service 403.1M debt without equity dilution
Financial Metrics
Revenue
101.2M
Net Income
-10.2M
EPS (Diluted)
$-0.12
Free Cash Flow
-50.9M
Total Assets
1.1B
Cash
48.5M
Profitability Ratios
Gross Margin
34.5%
Operating Margin
-3.8%
Net Margin
-10.1%
ROE
-1.9%
ROA
-0.9%
FCF Margin
-50.3%
Balance Sheet & Liquidity
Current Ratio
1.73x
Quick Ratio
1.32x
Debt/Equity
0.77x
Debt/Assets
52.6%
Interest Coverage
-0.61x
Long-term Debt
403.1M
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: 2026-05-06T18:33:20.224052 |
Data as of: 2026-03-31 |
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