Investment Thesis
Sachem Capital demonstrates impressive growth with 18.1% revenue and 243.6% net income expansion, supported by a 54.1% net margin. However, significant concerns exist regarding capital efficiency (ROE 3.6%), a dangerously low cash position ($10.9M against $230.2M debt), and acute earnings quality issues where net income exceeds operating cash flow by 233%, suggesting non-cash gains or accounting adjustments are driving reported profitability.
Strengths
- Strong YoY revenue growth of 18.1% demonstrates business momentum
- Exceptional net income expansion of 243.6% YoY with 54.1% net margin
- Positive free cash flow generation with 16.6% FCF margin
- Total assets of $460M provide substantive asset base for a REIT
Risks
- Critical liquidity concern: only $10.9M cash against $230.2M long-term debt obligations
- Severe earnings quality red flag: net income ($6.3M) exceeds operating cash flow ($2.7M) by 133%, indicating non-cash gains or potential accounting manipulation
- Low returns on equity (3.6%) and assets (1.4%) despite high margins suggest capital is trapped in leveraged structure
- High leverage at 1.32x debt-to-equity with missing interest coverage metrics prevents full solvency assessment
- Missing current and quick ratios prevents liquidity evaluation; insider activity at zero for 90 days
Key Metrics to Watch
- Operating cash flow to net income ratio - must improve toward 80%+ to validate earnings quality
- Cash position trend and debt covenant compliance status
- Interest coverage ratio and debt refinancing activity
- Return on equity trajectory - current 3.6% must improve meaningfully
Financial Metrics
Revenue
11.7M
Net Income
6.3M
EPS (Diluted)
$0.04
Free Cash Flow
1.9M
Total Assets
460.0M
Cash
10.9M
Profitability Ratios
Gross Margin
N/A
Operating Margin
14.8%
Net Margin
54.1%
ROE
3.6%
ROA
1.4%
FCF Margin
16.6%
Balance Sheet & Liquidity
Current Ratio
N/A
Quick Ratio
N/A
Debt/Equity
1.32x
Debt/Assets
62.0%
Interest Coverage
N/A
Long-term Debt
230.2M
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: 2026-04-15T12:33:20.907270 |
Data as of: 2025-12-31 |
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