Investment Thesis
Waters Corp exhibits severe profitability and cash flow deterioration, with negative operating income (-$47M), negative free cash flow (-$42M), and inability to service debt from operations (interest coverage -1.0x) despite a 46.6% gross margin. The unexplained 6734% revenue growth suggests major business disruption or data anomalies requiring clarification. While the balance sheet remains solid, operational cash burn and sustained unprofitability make the company fundamentally unattractive.
Strengths
- Strong gross margin of 46.6% demonstrates pricing power and product competitiveness
- Solid balance sheet with $24.5B assets and conservative 0.32x debt-to-equity ratio
- Adequate liquidity with 1.79x current ratio and $462M cash reserves
Risks
- Negative operating and free cash flow (-$42M FCF) unsustainable; company burning cash despite revenue growth
- Negative interest coverage (-1.0x) indicates inability to service $4.9B debt from operations
- Severe margin compression (46.6% gross to -5.7% net) suggests significant operational or structural problems requiring investigation
Key Metrics to Watch
- Operating cash flow recovery and path to positive free cash flow
- Operating margin expansion toward historical norms and explanation of 6734% revenue growth anomaly
- Interest coverage ratio improvement demonstrating debt service capability from core operations
Financial Metrics
Revenue
1.3B
Net Income
-72.0M
EPS (Diluted)
$-0.87
Free Cash Flow
-42.0M
Total Assets
24.5B
Cash
462.0M
Profitability Ratios
Gross Margin
46.6%
Operating Margin
-3.7%
Net Margin
-5.7%
ROE
-0.5%
ROA
-0.3%
FCF Margin
-3.3%
Balance Sheet & Liquidity
Current Ratio
1.79x
Quick Ratio
1.13x
Debt/Equity
0.32x
Debt/Assets
37.7%
Interest Coverage
-0.98x
Long-term Debt
4.9B
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: 2026-05-13T07:09:32.613860 |
Data as of: 2026-04-04 |
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