Investment Thesis
SR Bancorp exhibits severe profitability challenges with ROE of 1.3% and ROA of 0.2%, indicating poor capital efficiency typical of a struggling regional bank. The interest coverage ratio of 0.4x is critically low, signaling operating income insufficient to cover interest obligations. While the balance sheet shows no long-term debt and positive cash flow, these cannot offset deteriorating operational fundamentals.
Strengths
- Zero long-term debt position provides financial flexibility and reduces default risk
- Positive operating and free cash flow generation ($6.8M and $6.1M respectively) demonstrates cash-generating capability
- Strong free cash flow margin of 16.7% relative to revenue shows efficiency in cash deployment
Risks
- Interest coverage ratio of 0.4x indicates operating income severely inadequate to service interest expenses, creating solvency concerns
- Abysmal return metrics (ROE 1.3%, ROA 0.2%) reveal severely depressed profitability and asset utilization for a financial institution
- Flat net income growth (+0.0% YoY) despite EPS growth of 138.4% suggests unsustainable earnings driven by share buybacks rather than operational improvement
- Small revenue base ($36.7M) with lack of YoY growth data suggests stagnation in a competitive banking sector
Key Metrics to Watch
- Interest coverage ratio trend - critical indicator of ability to service debt obligations
- Return on equity and return on assets - fundamental profitability metrics for banking sector
- Net income growth trajectory - watch for sustaining profitability without relying on share buybacks
Financial Metrics
Revenue
36.7M
Net Income
2.4M
EPS (Diluted)
$0.31
Free Cash Flow
6.1M
Total Assets
1.1B
Cash
63.7M
Profitability Ratios
Gross Margin
N/A
Operating Margin
8.6%
Net Margin
6.6%
ROE
1.3%
ROA
0.2%
FCF Margin
16.7%
Balance Sheet & Liquidity
Current Ratio
N/A
Quick Ratio
N/A
Debt/Equity
0.00x
Debt/Assets
83.9%
Interest Coverage
0.39x
Long-term Debt
N/A
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: 2026-05-16T06:32:01.829938 |
Data as of: 2026-03-31 |
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