Investment Thesis
Tennant Co exhibits deteriorating fundamentals with declining revenue (-6.5% YoY), near-zero profitability (0.1% net margin), and critically, negative operating cash flow of -$31.2M, indicating the business is not generating cash despite accounting profitability. The 46.1% EPS decline, negative free cash flow of -$34.4M, and negligible returns on equity (0.0%) signal structural business weakness that balance sheet strength alone cannot sustain.
Strengths
- Solid liquidity position with 2.12x current ratio and $82.6M cash on hand
- Reasonable gross margin of 38.1% indicates pricing power and cost structure
- Manageable debt-to-equity ratio of 0.67x provides some financial flexibility
Risks
- Operating cash flow negative $31.2M while free cash flow burns $34.4M annually—unsustainable cash generation
- Revenue contracting 6.5% YoY with profitability collapsing to 0.1% net margin—margin compression amid declining sales
- EPS declined 46.1% YoY with zero returns on equity and assets—capital is destroyed, not deployed effectively
Key Metrics to Watch
- Operating cash flow trend—must return to positive territory immediately
- Revenue stabilization and gross margin maintenance as company restructures
- Free cash flow improvement and management's capital allocation decisions
Financial Metrics
Revenue
297.9M
Net Income
200.0K
EPS (Diluted)
$0.01
Free Cash Flow
-34.4M
Total Assets
1.3B
Cash
82.6M
Profitability Ratios
Gross Margin
38.1%
Operating Margin
1.6%
Net Margin
0.1%
ROE
0.0%
ROA
0.0%
FCF Margin
-11.5%
Balance Sheet & Liquidity
Current Ratio
2.12x
Quick Ratio
1.41x
Debt/Equity
0.67x
Debt/Assets
58.2%
Interest Coverage
3.27x
Long-term Debt
358.3M
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: 2026-05-06T16:30:24.915128 |
Data as of: 2026-03-31 |
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