Investment Thesis
Vontier exhibits critical solvency and liquidity stress signals that outweigh modest revenue growth. Interest coverage of 1.4x indicates inadequate debt service capacity, while a 0.90x quick ratio signals liquidity pressure. Declining net income (-3.8% YoY) despite revenue growth (+3.2%) and severely weak free cash flow generation ($24.8M on $750.6M revenue) suggest deteriorating operational quality.
Strengths
- Positive revenue growth of 3.2% year-over-year
- Reasonable operating margin at 18.0%
- Positive free cash flow of $24.8M
Risks
- Critically low interest coverage ratio of 1.4x indicates severe debt service risk
- Quick ratio of 0.90x below 1.0 signals acute short-term liquidity stress
- Net income declining 3.8% YoY despite revenue growth indicates operational deterioration
- Extremely weak free cash flow margin of 3.3% relative to net income suggests potential working capital or balance sheet deterioration
- High leverage with debt-to-equity of 1.27x combined with minimal interest coverage provides no margin of safety
Key Metrics to Watch
- Interest coverage ratio trend - any further decline below 1.4x poses default risk
- Operating cash flow sustainability and working capital efficiency
- Debt refinancing requirements and covenant compliance status
Financial Metrics
Revenue
750.6M
Net Income
94.3M
EPS (Diluted)
$0.66
Free Cash Flow
24.8M
Total Assets
4.1B
Cash
233.8M
Profitability Ratios
Gross Margin
141.2%
Operating Margin
18.0%
Net Margin
12.6%
ROE
7.5%
ROA
2.3%
FCF Margin
3.3%
Balance Sheet & Liquidity
Current Ratio
1.23x
Quick Ratio
0.90x
Debt/Equity
1.27x
Debt/Assets
69.4%
Interest Coverage
1.42x
Long-term Debt
1.6B
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: 2026-05-09T13:43:57.278315 |
Data as of: 2026-04-03 |
Powered by Claude AI