Investment Thesis
Vera Bradley is experiencing severe operational distress with negative operating income (-31.9M), net income (-47.8M), and operating cash flow (-10.0M) despite reporting exceptional revenue growth, indicating fundamental business deterioration rather than sustainable expansion. The company is destroying shareholder value with negative ROE and ROA while burning cash at an unsustainable rate, with only 18.5M in liquid reserves against persistent negative cash flows.
Strengths
- Current ratio of 2.37x provides adequate short-term liquidity buffer
- Low debt-to-equity ratio of 0.08x indicates conservative capital structure
- Gross margin of 46.4% demonstrates reasonable product-level profitability
Risks
- Operating cash flow of -10.0M with free cash flow of -13.3M indicates unsustainable cash burn that will rapidly deplete the 18.5M cash position
- Negative operating margin (-11.8%) and net margin (-17.7%) signal the company cannot achieve profitability at current scale regardless of revenue levels
- The 58,466% YoY revenue growth accompanied by negative operating income suggests deteriorating unit economics or accounting/merger-related anomalies requiring investigation
Key Metrics to Watch
- Operating cash flow trend and timeline to positive cash generation
- Quarterly operating income and path to positive EBITDA
- Monthly cash burn rate and runway before potential liquidity crisis
Financial Metrics
Revenue
269.7M
Net Income
-47.8M
EPS (Diluted)
$-1.71
Free Cash Flow
-13.3M
Total Assets
234.0M
Cash
18.5M
Profitability Ratios
Gross Margin
46.4%
Operating Margin
-11.8%
Net Margin
-17.7%
ROE
-36.3%
ROA
-20.4%
FCF Margin
-4.9%
Balance Sheet & Liquidity
Current Ratio
2.37x
Quick Ratio
0.87x
Debt/Equity
0.08x
Debt/Assets
43.7%
Interest Coverage
-179.28x
Long-term Debt
10.0M
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: 2026-04-18T19:51:22.705084 |
Data as of: 2026-01-31 |
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