Investment Thesis
Stagwell is unprofitable with negative free cash flow of -$37.2M annually, burning cash operationally and unable to service $1.4B debt from operations given interest coverage of 0.2x. Minimal revenue growth of 2.4%, deteriorating liquidity (0.83x current ratio), and high leverage (2.04x debt-to-equity) create significant financial distress risk with limited sustainability.
Strengths
- Generates positive operating income of $9.6M despite unprofitability
- Maintains $114.9M cash for near-term operational runway
- Established revenue base of $704.1M demonstrates operational scale
Risks
- Negative free cash flow of -$37.2M indicates unsustainable operational cash burn
- Interest coverage ratio of 0.2x means operations cannot service $1.4B debt burden
- Current ratio of 0.83x signals imminent liquidity stress and potential covenant violations
- Operating margin of 1.4% with net losses shows structural profitability challenges
- Revenue growth of 2.4% YoY insufficient to reduce leverage or improve cash position
Key Metrics to Watch
- Operating cash flow trend - critical to return to positive territory
- Interest coverage ratio - must exceed 1.0x to demonstrate debt serviceability
- Revenue growth rate - needs acceleration above 5% to support debt load
- Current and quick ratios - must stabilize above 1.0x to avoid liquidity crisis
- Net margin - path to profitability essential for long-term viability
Financial Metrics
Revenue
704.1M
Net Income
-13.0M
EPS (Diluted)
$-3.23
Free Cash Flow
-37.2M
Total Assets
4.2B
Cash
114.9M
Profitability Ratios
Gross Margin
N/A
Operating Margin
1.4%
Net Margin
-1.8%
ROE
-1.8%
ROA
-0.3%
FCF Margin
-5.3%
Balance Sheet & Liquidity
Current Ratio
0.83x
Quick Ratio
0.83x
Debt/Equity
2.04x
Debt/Assets
82.4%
Interest Coverage
0.16x
Long-term Debt
1.4B
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: 2026-05-06T18:57:48.348156 |
Data as of: 2026-03-31 |
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