Investment Thesis
TXNM faces a critical liquidity crisis with current ratio of 0.55x and negative free cash flow of -$159.5M, indicating inability to fund operations and debt service from internal cash generation. Profitability is collapsing (net income down 10.9%, EPS down 44.6%) while massive capex ($312.7M) exceeds operating cash flow, creating unsustainable financing dependency.
Strengths
- Positive operating cash flow of $153.2M provides some debt service capacity
- Operating margin of 15.3% demonstrates core business competitiveness
- Debt-to-Equity ratio of 1.48x is manageable for utility sector
Risks
- Critical liquidity crisis: current ratio of 0.55x indicates inability to meet short-term obligations
- Negative free cash flow of -$159.5M is unsustainable without external financing
- Interest coverage of 1.1x leaves minimal cushion for debt service defaults
- Profitability deteriorating with net margin of 0.7% despite 133% gross margin (data quality concern)
- Minimal cash reserves of $5.6M inadequate for $312.7M annual capex
Key Metrics to Watch
- Quarterly free cash flow and trend in capex spending
- Current ratio and working capital changes
- Interest coverage ratio and debt refinancing activity
- Quarterly revenue and net margin trends
Financial Metrics
Revenue
505.0M
Net Income
3.7M
EPS (Diluted)
$0.03
Free Cash Flow
-159.5M
Total Assets
12.1B
Cash
5.6M
Profitability Ratios
Gross Margin
133.0%
Operating Margin
15.3%
Net Margin
0.7%
ROE
0.1%
ROA
0.0%
FCF Margin
-31.6%
Balance Sheet & Liquidity
Current Ratio
0.55x
Quick Ratio
0.36x
Debt/Equity
1.48x
Debt/Assets
71.0%
Interest Coverage
1.12x
Long-term Debt
5.1B
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: 2026-05-10T07:51:12.699313 |
Data as of: 2026-03-31 |
Powered by Claude AI