Investment Thesis
STRATTEC maintains a fortress balance sheet with zero debt and strong liquidity, generating solid free cash flow of $30.7M. However, declining net income and razor-thin profit margins (3.9% net, 4.8% operating) reflect the challenging economics of automotive supply, limiting fundamental investment appeal.
Strengths
- Zero long-term debt with exceptional balance sheet strength (Debt/Equity 0.00x)
- Strong liquidity ratios (Current 2.63x, Quick 1.99x) and substantial cash reserves ($107M)
- Positive free cash flow generation ($30.7M) with 7.2% FCF margin
Risks
- Net income declining 1.2% YoY despite stable revenue, signaling deteriorating profitability
- Extremely thin profit margins (3.9% net margin, 4.8% operating margin) typical of struggling supplier
- Poor capital efficiency with low ROE (7%) and ROA (4.2%) in cyclical automotive industry
Key Metrics to Watch
- Operating margin recovery and gross margin expansion trends
- Year-over-year net income growth stabilization
- Free cash flow sustainability and capital deployment decisions
Financial Metrics
Revenue
427.6M
Net Income
16.7M
EPS (Diluted)
$4.04
Free Cash Flow
30.7M
Total Assets
399.5M
Cash
107.0M
Profitability Ratios
Gross Margin
16.8%
Operating Margin
4.8%
Net Margin
3.9%
ROE
7.0%
ROA
4.2%
FCF Margin
7.2%
Balance Sheet & Liquidity
Current Ratio
2.63x
Quick Ratio
1.99x
Debt/Equity
0.00x
Debt/Assets
33.1%
Interest Coverage
63.21x
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: 2026-05-09T13:15:56.261373 |
Data as of: 2026-03-29 |
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