Investment Thesis
Stock Yards Bancorp demonstrates strong revenue growth (+55.7% YoY) with exceptional operating margins (39.2%), but fundamental returns are severely weak with ROE of only 3.3% and ROA of 0.4%. The alarming disconnect between net income ($36.6M) and operating cash flow ($12.2M) signals significant earnings quality concerns, compounded by tight interest coverage (1.3x) that leaves minimal safety margin for a financial institution.
Strengths
- Robust revenue growth of 55.7% YoY demonstrates expanding business operations
- Exceptional operating margin of 39.2% and net margin of 31.1% show strong cost discipline
- Conservative balance sheet with minimal debt (0.02x debt/equity) and adequate liquidity of $254.5M
Risks
- Critically weak profitability returns with ROE of 3.3% and ROA of 0.4%, far below banking sector standards
- Severe earnings quality red flag: operating cash flow of only $12.2M against net income of $36.6M (33% ratio) suggests potential accounting adjustments or non-cash gains
- Dangerously low interest coverage ratio of 1.3x provides minimal buffer for covering debt obligations in a stressed interest rate environment
Key Metrics to Watch
- Operating cash flow to net income ratio - improve from current 33% to 60%+ to validate earnings quality
- Return on equity and return on assets - critical improvement needed to justify capital deployment in banking operations
- Interest coverage ratio - must strengthen above 2.5x to ensure financial stability and debt service capacity
Financial Metrics
Revenue
117.6M
Net Income
36.6M
EPS (Diluted)
$1.24
Free Cash Flow
9.5M
Total Assets
9.5B
Cash
254.5M
Profitability Ratios
Gross Margin
N/A
Operating Margin
39.2%
Net Margin
31.1%
ROE
3.3%
ROA
0.4%
FCF Margin
8.1%
Balance Sheet & Liquidity
Current Ratio
N/A
Quick Ratio
N/A
Debt/Equity
0.02x
Debt/Assets
88.3%
Interest Coverage
1.27x
Long-term Debt
26.8M
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: 2026-05-06T11:29:51.739070 |
Data as of: 2026-03-31 |
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