Investment Thesis
Chicago Atlantic demonstrates financial stability with conservative leverage (0.16x debt/equity) and positive cash flow, but fundamentals are deteriorating with stagnant revenue growth (0.8% YoY), declining earnings (-2.8% YoY), and severely poor capital returns (ROE 1.6%, ROA 1.1%), indicating limited shareholder value creation.
Strengths
- Strong operating and net profit margins at 36.9% demonstrate pricing power and operational efficiency
- Conservative balance sheet with low debt-to-equity ratio of 0.16x and manageable interest coverage of 2.5x
- Positive free cash flow of $3.2M with 24.1% FCF margin provides financial flexibility
Risks
- Stagnant revenue growth of 0.8% YoY indicates minimal business expansion and market headwinds
- Declining earnings (-2.8% net income, -10.6% EPS) with accelerated EPS deterioration suggesting equity dilution
- Abysmal capital returns (1.6% ROE, 1.1% ROA) show the company is deploying $435.9M in assets inefficiently with minimal shareholder value creation
Key Metrics to Watch
- Revenue growth acceleration from current 0.8% YoY stagnation level
- Net income and earnings per share trajectory reversal
- Return on equity improvement and share dilution rate from Form 4 insider activity patterns
Financial Metrics
Revenue
13.1M
Net Income
4.8M
EPS (Diluted)
$0.23
Free Cash Flow
3.2M
Total Assets
435.9M
Cash
27.9M
Profitability Ratios
Gross Margin
N/A
Operating Margin
36.9%
Net Margin
36.9%
ROE
1.6%
ROA
1.1%
FCF Margin
24.1%
Balance Sheet & Liquidity
Current Ratio
N/A
Quick Ratio
N/A
Debt/Equity
0.16x
Debt/Assets
30.4%
Interest Coverage
2.51x
Long-term Debt
49.4M
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: 2026-05-09T12:49:36.649831 |
Data as of: 2026-03-31 |
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