Investment Thesis
Ralliant Corp exhibits deteriorating fundamentals with revenue declining 4% YoY and net income falling 14.9% YoY, indicating accelerating profitability compression. Critically low return metrics (ROE 2.8%, ROA 1.2%) and weak free cash flow generation (1.9% FCF margin) signal inefficient capital deployment. While gross margins remain healthy at 50.9%, the operational weakness combined with a dangerously tight quick ratio of 1.05x raises sustainability concerns.
Strengths
- Healthy gross margin of 50.9% demonstrates pricing power and cost structure
- Moderate debt/equity ratio of 0.73x provides financial flexibility
- Cash position of $268M provides liquidity cushion
Risks
- Revenue and net income both declining YoY with profit decline accelerating faster
- Critically low ROE (2.8%) and ROA (1.2%) indicate severe capital inefficiency
- Quick ratio of 1.05x and weak operating cash flow ($19.1M) on $534.6M revenue signals cash generation stress
- Free cash flow margin of 1.9% is insufficient for sustainable operations and shareholder returns
Key Metrics to Watch
- Operating cash flow trend relative to revenue
- Gross margin sustainability as business contracts
- Quick ratio and working capital management
- Return metrics (ROE/ROA) recovery trajectory
Financial Metrics
Revenue
534.6M
Net Income
44.2M
EPS (Diluted)
$0.39
Free Cash Flow
10.4M
Total Assets
3.7B
Cash
268.0M
Profitability Ratios
Gross Margin
50.9%
Operating Margin
12.7%
Net Margin
8.3%
ROE
2.8%
ROA
1.2%
FCF Margin
1.9%
Balance Sheet & Liquidity
Current Ratio
1.61x
Quick Ratio
1.05x
Debt/Equity
0.73x
Debt/Assets
57.7%
Interest Coverage
N/A
Long-term Debt
1.1B
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: 2026-05-14T09:03:56.374444 |
Data as of: 2026-04-03 |
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