Investment Thesis
StandardAero faces critical cash flow challenges with negative operating cash flow of -$119.6M despite positive net income, indicating earnings quality concerns. Combined with flat revenue growth (0% YoY), deteriorating returns on capital (ROE 3%, ROA 1.2%), and an interest coverage ratio of 3.8x that leaves limited room for adverse conditions, the company exhibits operational stress and sustainability risks in a capital-intensive industry.
Strengths
- Adequate liquidity position with current ratio of 2.12x and quick ratio of 1.59x
- Moderate leverage at debt-to-equity of 0.81x provides some financial flexibility
- Positive net income of $79.9M and operating income of $143.1M show operational profitability
Risks
- Severely negative free cash flow of -$135.1M indicates the company is burning cash despite reported profitability, raising concerns about earnings quality and sustainability
- Flat year-over-year revenue growth (0%) combined with deteriorating returns (ROE 3%, ROA 1.2%) suggests stagnation and poor capital efficiency
- Interest coverage ratio of 3.8x is borderline concerning and leaves limited cushion for operational disruptions or debt servicing challenges
Key Metrics to Watch
- Operating cash flow trend - critical to return to positive territory
- Revenue growth acceleration and gross margin expansion
- Return on equity and return on assets improvement trajectories
Financial Metrics
Revenue
1.6B
Net Income
79.9M
EPS (Diluted)
$0.24
Free Cash Flow
-135.1M
Total Assets
6.7B
Cash
89.2M
Profitability Ratios
Gross Margin
N/A
Operating Margin
8.8%
Net Margin
4.9%
ROE
3.0%
ROA
1.2%
FCF Margin
-8.3%
Balance Sheet & Liquidity
Current Ratio
2.12x
Quick Ratio
1.59x
Debt/Equity
0.81x
Debt/Assets
59.9%
Interest Coverage
3.75x
Long-term Debt
2.2B
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: 2026-05-09T13:00:57.254696 |
Data as of: 2026-03-31 |
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