Investment Thesis
Sun Country Airlines is marginally profitable but fundamentally challenged by negative free cash flow, dangerously tight interest coverage of 1.7x, and liquidity constraints with current ratio below 1.0. Despite 4.7% revenue growth, net income is flat and capital returns are severely depressed (ROE 3.7%, ROA 1.4%), indicating the business is unable to convert growth into shareholder value while managing high CapEx burden.
Strengths
- Positive operating income ($36.9M) and net income ($24.1M) demonstrates baseline profitability
- Operating margin of 10.9% is reasonable for airline sector
- Debt-to-equity ratio of 0.47x is moderate for capital-intensive industry
Risks
- Negative free cash flow of -$10.8M (-3.2% FCF margin) is unsustainable and suggests inability to fund operations and debt service organically
- Interest coverage of 1.7x is critically low; minimal buffer for revenue disruptions or rate increases
- Current ratio of 0.83x indicates acute liquidity strain; company may struggle to meet near-term obligations
Key Metrics to Watch
- Free cash flow trend—must return to positive to validate business model sustainability
- Interest coverage ratio—target minimum 2.5x+ for financial stability
- Current ratio and cash position—must strengthen to reduce default risk
Financial Metrics
Revenue
338.4M
Net Income
24.1M
EPS (Diluted)
$0.43
Free Cash Flow
-10.8M
Total Assets
1.7B
Cash
153.7M
Profitability Ratios
Gross Margin
N/A
Operating Margin
10.9%
Net Margin
7.1%
ROE
3.7%
ROA
1.4%
FCF Margin
-3.2%
Balance Sheet & Liquidity
Current Ratio
0.83x
Quick Ratio
0.80x
Debt/Equity
0.47x
Debt/Assets
60.8%
Interest Coverage
1.66x
Long-term Debt
306.9M
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: 2026-05-09T13:09:33.277840 |
Data as of: 2026-03-31 |
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