Investment Thesis
Sunrise Real Estate exhibits a critical disconnect between accounting profitability and operational cash generation, with negative operating cash flow of -$2.9M despite reported net income of $5.7M, indicating poor earnings quality and unsustainable business performance. The 793.8% revenue growth appears driven by consolidation rather than organic operations, while persistent negative operating margins (-19%) and low return metrics (ROE 4.9%, ROA 3.3%) reveal a fundamentally unprofitable business model for an apartment operator.
Strengths
- Strong balance sheet with zero long-term debt and $116.1M equity
- Adequate liquidity position with 1.88x current ratio and $17.2M cash reserves
- Significant asset base of $171.7M providing collateral and operational foundation
Risks
- Negative operating cash flow of -$2.9M despite positive net income signals severe earnings quality concerns
- Negative operating margin (-19%) indicates core operations are unprofitable and unsustainable
- Extreme revenue growth (793.8% YoY) likely from acquisitions rather than organic growth, masking operational dysfunction
- Negative free cash flow (-23.7% FCF margin) means company cannot fund operations or returns from core business
Key Metrics to Watch
- Operating cash flow trend—must return to positive to validate business sustainability
- Operating margin expansion—currently deeply negative, needs improvement to 5%+ to be viable
- Organic revenue growth—must separate acquisition-driven growth from actual operational performance
- Asset quality and occupancy rates—verify apartment portfolio is generating intended rental income
Financial Metrics
Revenue
12.4M
Net Income
5.7M
EPS (Diluted)
$0.08
Free Cash Flow
-2.9M
Total Assets
171.7M
Cash
17.2M
Profitability Ratios
Gross Margin
6.8%
Operating Margin
-19.0%
Net Margin
46.2%
ROE
4.9%
ROA
3.3%
FCF Margin
-23.7%
Balance Sheet & Liquidity
Current Ratio
1.88x
Quick Ratio
1.70x
Debt/Equity
0.00x
Debt/Assets
40.7%
Interest Coverage
N/A
Long-term Debt
0.0
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: 2026-04-16T14:15:21.527309 |
Data as of: 2025-09-30 |
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