Investment Thesis
Safehold exhibits healthy profit margins (23% operating, 26% net) but faces critical solvency concerns with interest coverage of 0.2x, meaning operating income covers only 20% of interest expenses. Negative operating cash flow (-$8.6M) and free cash flow (-$41.9M) combined with minimal cash reserves ($19.3M) against $4.7B in debt indicate severe refinancing risk and potential financial distress.
Strengths
- Strong operating margin of 23% demonstrates operational efficiency
- Positive net income of $28.9M with modest 5.4% revenue growth
- EPS growth of 7.4% shows per-share improvement despite flat net income
Risks
- Critical solvency issue: interest coverage of 0.2x means debt service cannot be met from operations
- Negative operating cash flow (-$8.6M) and free cash flow (-$41.9M) indicate cash burn despite accounting profits
- Dangerous capital structure: $4.7B debt with only $19.3M cash and 1.93x debt-to-equity ratio creates refinancing risk
- Net income growth stalled at 0% YoY while interest obligations remain high
- Large negative FCF margin of -37.8% suggests business cannot sustain current debt levels organically
Key Metrics to Watch
- Interest coverage ratio trend and debt service coverage ratio
- Operating and free cash flow recovery
- Debt refinancing schedule and terms
- Cash position and liquidity metrics
- Interest expense levels and debt management actions
Financial Metrics
Revenue
110.9M
Net Income
28.9M
EPS (Diluted)
$0.40
Free Cash Flow
-41.9M
Total Assets
7.4B
Cash
19.3M
Profitability Ratios
Gross Margin
N/A
Operating Margin
23.0%
Net Margin
26.0%
ROE
1.2%
ROA
0.4%
FCF Margin
-37.8%
Balance Sheet & Liquidity
Current Ratio
N/A
Quick Ratio
N/A
Debt/Equity
1.93x
Debt/Assets
66.7%
Interest Coverage
0.17x
Long-term Debt
4.7B
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: 2026-05-06T18:48:48.100161 |
Data as of: 2026-03-31 |
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