Investment Thesis
Tecogen shows strong revenue growth (+19.7% YoY) and maintains a solid balance sheet with no debt and strong liquidity, but is deeply unprofitable with a -33.7% operating margin and negative operating cash flow of -$3.1M. The company is burning cash despite positive gross margins, indicating unsustainable unit economics and execution challenges that must be resolved before the cash runway depletes.
Strengths
- Revenue growth of 19.7% YoY demonstrates market demand
- Gross margin of 40.9% indicates viable product economics at the unit level
- Strong liquidity position (Current Ratio 3.02x, Quick Ratio 1.72x) and zero long-term debt provide financial flexibility for turnaround
Risks
- Operating losses of -$2.1M on -33.7% margin despite positive gross profit indicate uncontrolled SG&A expenses relative to scale
- Negative operating cash flow of -$3.1M shows core business is burning cash; at this rate, ~3-year runway on $9.3M cash reserves
- Unprofitable growth pattern is unsustainable; company is scaling into larger losses rather than profitability
- Negative ROE and ROA indicate value destruction for shareholders
Key Metrics to Watch
- Operating margin trajectory - must show path to breakeven
- Operating cash flow - critical to assess sustainability of current burn rate
- SG&A expense ratio to revenue - need to demonstrate operating leverage
Financial Metrics
Revenue
6.3M
Net Income
-2.1M
EPS (Diluted)
$-0.07
Free Cash Flow
-3.2M
Total Assets
34.5M
Cash
9.3M
Profitability Ratios
Gross Margin
40.9%
Operating Margin
-33.7%
Net Margin
-33.5%
ROE
-10.8%
ROA
-6.2%
FCF Margin
-49.8%
Balance Sheet & Liquidity
Current Ratio
3.02x
Quick Ratio
1.72x
Debt/Equity
0.00x
Debt/Assets
43.3%
Interest Coverage
-58.46x
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: 2026-05-14T07:40:34.880198 |
Data as of: 2026-03-31 |
Powered by Claude AI