Investment Thesis
SPAR Group is in financial distress with unprofitable operations, negative free cash flow of -$4.4M, and a critically weak balance sheet featuring a debt/equity ratio of 54.63x with only $59K in stockholders' equity. The company's 16.8% revenue decline combined with operating cash burn and liquidity concerns (current ratio 0.88x) create significant bankruptcy risk.
Strengths
- Maintains positive gross margin of 22.3% suggesting underlying service value
- Retains $4.3M in cash providing near-term operational runway
- Operates established business generating $30.5M in annual revenue
Risks
- Negative free cash flow of -$4.4M is unsustainable without capital infusion or restructuring
- Critically overleveraged balance sheet with debt/equity of 54.63x and $59K equity cushion creates imminent solvency risk
- Revenue declining 16.8% YoY with negative operating income and net loss indicating fundamental business deterioration
- Current ratio of 0.88x signals potential near-term liquidity constraints and inability to meet obligations
- Negative interest coverage (-0.1x) means company cannot service debt from operations
Key Metrics to Watch
- Operating cash flow inflection point and return to positive territory
- Revenue stabilization and growth trajectory
- Balance sheet restructuring and debt refinancing activities
- Cash burn rate and liquidity runway before crisis
Financial Metrics
Revenue
30.5M
Net Income
-553.0K
EPS (Diluted)
$-0.02
Free Cash Flow
-4.4M
Total Assets
51.0M
Cash
4.3M
Profitability Ratios
Gross Margin
22.3%
Operating Margin
-0.1%
Net Margin
-1.8%
ROE
-937.3%
ROA
-1.1%
FCF Margin
-14.5%
Balance Sheet & Liquidity
Current Ratio
0.88x
Quick Ratio
0.88x
Debt/Equity
54.63x
Debt/Assets
99.9%
Interest Coverage
-0.12x
Long-term Debt
3.2M
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: 2026-05-14T09:09:32.606413 |
Data as of: 2026-03-31 |
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