Investment Thesis
Stoneridge is experiencing significant operational challenges with declining revenue (-5.2% YoY), substantial operating losses (-$9.0M), and negative interest coverage (-2.5x), indicating the company cannot service debt from operations. While positive free cash flow ($33.2M) and adequate liquidity provide near-term resilience, the combination of unprofitability, high leverage (Debt/Equity: 1.16x), and deteriorating earnings (EPS -516.7% YoY) suggest accelerating financial distress.
Strengths
- Positive operating cash flow of $34.0M demonstrates cash generation capability despite accounting losses
- Strong free cash flow margin of 20.6% indicates disciplined working capital management
- Adequate liquidity with current ratio of 2.02x and $70.5M cash position supporting near-term obligations
Risks
- Negative interest coverage (-2.5x) with operating income of -$9.0M creates unsustainable debt service position
- Unprofitable operations with -$27.9M net loss and -17.4% net margin indicate fundamental business model deterioration
- Revenue contraction (-5.2% YoY) combined with 1.16x Debt/Equity ratio increases bankruptcy risk without operational recovery
Key Metrics to Watch
- Operating income and operating margin - must return to positive territory for viability
- Interest coverage ratio - needs to stabilize above 2.0x to remain solvent
- Revenue trend and gross margin - indicates whether cost structure can be sustained or restructuring required
Financial Metrics
Revenue
160.8M
Net Income
-27.9M
EPS (Diluted)
$-1.00
Free Cash Flow
33.2M
Total Assets
512.0M
Cash
70.5M
Profitability Ratios
Gross Margin
30.8%
Operating Margin
-5.6%
Net Margin
-17.4%
ROE
-17.9%
ROA
-5.5%
FCF Margin
20.6%
Balance Sheet & Liquidity
Current Ratio
2.02x
Quick Ratio
1.37x
Debt/Equity
1.16x
Debt/Assets
0.0%
Interest Coverage
-2.47x
Long-term Debt
180.9M
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: 2026-05-16T06:32:48.785853 |
Data as of: 2026-03-31 |
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