Investment Thesis
United Bancorp faces critical financial distress with interest coverage of 0.5x, indicating operating income cannot service debt obligations. Despite 56.8% revenue growth, net income growth lagged at 5.0%, and the company generated negative free cash flow of -$1.8M, signaling deteriorating operational efficiency and cash burn.
Strengths
- Strong revenue growth of 56.8% year-over-year
- Zero long-term debt with clean capital structure
- Positive net profit margin of 19.1%
Risks
- Interest coverage ratio of 0.5x - operating income insufficient to cover interest expenses (critical solvency risk)
- Negative free cash flow of -$1.8M with severe cash burn after capital expenditures
- Extremely low returns: ROA of 0.2% and ROE of 2.8% indicate minimal value generation on $858.5M asset base
- Quality of earnings deterioration: operating cash flow ($266K) vastly underperforms net income ($1.9M)
- Earnings growth decoupling from revenue - 56.8% top-line growth versus 5.0% net income growth signals margin compression
Key Metrics to Watch
- Interest coverage ratio - must improve to 1.5x+ for viability
- Free cash flow trend - persistent negative FCF unsustainable
- Return on Assets - current 0.2% indicates asset utilization dysfunction
- Operating cash flow quality - OCF to net income ratio needs normalization
Financial Metrics
Revenue
10.0M
Net Income
1.9M
EPS (Diluted)
$0.33
Free Cash Flow
-1.8M
Total Assets
858.5M
Cash
27.2M
Profitability Ratios
Gross Margin
N/A
Operating Margin
17.5%
Net Margin
19.1%
ROE
2.8%
ROA
0.2%
FCF Margin
-17.8%
Balance Sheet & Liquidity
Current Ratio
N/A
Quick Ratio
N/A
Debt/Equity
0.00x
Debt/Assets
92.1%
Interest Coverage
0.50x
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: 2026-05-15T07:36:37.943207 |
Data as of: 2026-03-31 |
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