Investment Thesis
Gentherm exhibits distressed fundamentals masked by reported profitability. Negative operating cash flow of -5.0M despite 4.2M net income indicates poor earnings quality, likely from low-margin acquisition integration. Declining net income (-71.8% YoY) combined with razor-thin 1.1% net margins and unsustainable -10.7M free cash flow signal deteriorating operational health.
Strengths
- Strong revenue scale at 393.7M supports operational footprint and market position
- Solid liquidity with 1.97x current ratio and 177.4M cash buffer provides near-term flexibility
- Moderate leverage at 0.31x debt/equity ratio preserves financial flexibility for restructuring
Risks
- Negative operating cash flow and negative free cash flow indicate unsustainable business model burning capital despite reported profits
- Net income declined 71.8% YoY while revenue surged, suggesting poor acquisition quality or severe operational margin compression
- Critically poor returns on capital (ROE 0.6%, ROA 0.3%) with razor-thin 1.1% net margin indicate inefficient asset deployment and zero error tolerance
Key Metrics to Watch
- Operating cash flow inflection point - must return to positive sustainability
- Cash position depletion rate against ongoing negative FCF trajectory
- Gross and net margin stabilization or further compression indicating structural deterioration
Financial Metrics
Revenue
393.7M
Net Income
4.2M
EPS (Diluted)
$0.14
Free Cash Flow
-10.7M
Total Assets
1.4B
Cash
177.4M
Profitability Ratios
Gross Margin
24.7%
Operating Margin
2.9%
Net Margin
1.1%
ROE
0.6%
ROA
0.3%
FCF Margin
-2.7%
Balance Sheet & Liquidity
Current Ratio
1.97x
Quick Ratio
1.36x
Debt/Equity
0.31x
Debt/Assets
49.9%
Interest Coverage
N/A
Long-term Debt
219.0M
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: 2026-04-29T15:23:02.026352 |
Data as of: 2026-03-31 |
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