Investment Thesis
SunCoke Energy faces critical financial distress with unprofitable operations (negative net margin -1.0%), deteriorating revenue trends (-5.1% YoY), and unsustainable leverage evidenced by interest coverage of only 0.4x. While positive free cash flow and adequate liquidity provide near-term runway, the combination of razor-thin margins and high debt load relative to earnings creates significant financial risk.
Strengths
- Positive free cash flow of $55.7M provides cash generation despite net losses
- Adequate liquidity position with current ratio of 2.23x and $104.4M cash reserves
- Essential industry position as coke producer for integrated steel manufacturing
Risks
- Critical interest coverage of 0.4x indicates company cannot service debt from operating earnings
- Unprofitable with negative net income and collapsing operating margins (1.0%) with no improvement buffer
- Declining revenue (-5.1% YoY) combined with high leverage (1.13x debt/equity) creates unsustainable debt burden
Key Metrics to Watch
- Interest coverage ratio - must improve toward 1.5x+ for financial viability
- Operating margin expansion - critical path to return to profitability and debt serviceability
- Free cash flow sustainability and revenue stabilization given current operational headwinds
Financial Metrics
Revenue
455.1M
Net Income
-4.4M
EPS (Diluted)
$-0.05
Free Cash Flow
55.7M
Total Assets
1.7B
Cash
104.4M
Profitability Ratios
Gross Margin
8.7%
Operating Margin
1.0%
Net Margin
-1.0%
ROE
-0.8%
ROA
-0.3%
FCF Margin
12.2%
Balance Sheet & Liquidity
Current Ratio
2.23x
Quick Ratio
1.31x
Debt/Equity
1.13x
Debt/Assets
64.8%
Interest Coverage
0.36x
Long-term Debt
659.9M
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: 2026-05-06T16:25:42.275990 |
Data as of: 2026-03-31 |
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