Investment Thesis
QCR Holdings exhibits alarming earnings quality issues with negative free cash flow (-$7.9M) despite reported net income of $33.4M, signaling potential asset quality deterioration or unsustainable accounting practices. Severely depressed capital returns (ROE 3.0%, ROA 0.3%) and interest coverage below 1.0x (0.6x) reveal fundamental inefficiency in capital deployment and debt servicing capacity.
Strengths
- Exceptional revenue growth of 91.8% YoY demonstrates expansion trajectory
- Strong operating margins (29.8%) and net margins (27.8%) suggest pricing power or operational leverage
- Conservative capital structure with 0.00x Debt/Equity provides financial flexibility
Risks
- Critical disconnect between reported net income ($33.4M) and operating cash flow ($4.4M) indicates severe earnings quality deterioration
- Negative free cash flow (-$7.9M) despite profitability suggests potential loan loss provisions or asset impairments
- Dangerously low return metrics (ROE 3.0%, ROA 0.3%) and interest coverage (0.6x) indicate poor capital efficiency and debt servicing stress
- Unusual 91.8% revenue growth for banking sector warrants investigation into acquisition impact and organic sustainability
Key Metrics to Watch
- Operating cash flow trend and reconciliation with net income
- Loan loss provisions as percentage of total assets
- Asset quality metrics (NPL ratio, charge-offs)
- Return on equity trajectory toward industry benchmarks (10%+)
- Interest coverage ratio improvement
Financial Metrics
Revenue
120.1M
Net Income
33.4M
EPS (Diluted)
$1.99
Free Cash Flow
-7.9M
Total Assets
9.6B
Cash
87.9M
Profitability Ratios
Gross Margin
N/A
Operating Margin
29.8%
Net Margin
27.8%
ROE
3.0%
ROA
0.3%
FCF Margin
-6.6%
Balance Sheet & Liquidity
Current Ratio
N/A
Quick Ratio
N/A
Debt/Equity
0.00x
Debt/Assets
88.3%
Interest Coverage
0.59x
Long-term Debt
N/A
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: 2026-05-09T06:36:29.698547 |
Data as of: 2026-03-31 |
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