Investment Thesis
Despite reported profitability, Wilhelmina International is burning cash with -$2.1M negative operating cash flow, indicating the P&L profits are not translating to sustainable business performance. Combined with razor-thin operating margins (2.8%), minimal revenue growth (2.3%), and abysmal returns on capital (ROA 0.6%, ROE 1.1%), the business model appears structurally challenged and unable to efficiently deploy its asset base.
Strengths
- Zero long-term debt and strong balance sheet provides financial cushion
- Adequate liquidity position with 1.74x current ratio and $6.7M cash reserves
- Net income growing 41.8% YoY on a small base, showing marginal operational improvement
Risks
- Critical: Negative operating cash flow of -$2.1M indicates cash burn despite reported profitability—business is not self-sustaining
- Suspicious 149.1% gross margin suggests accounting adjustments or revenue recognition issues masking underlying weakness
- Minuscule revenue base ($9.2M) with only 2.3% growth and abysmal capital returns (ROA 0.6%, ROE 1.1%) indicate structural inefficiency
- Negative free cash flow margin (-22.6%) will erode cash reserves; at current burn rate, approximately 3+ years of runway before insolvency
Key Metrics to Watch
- Operating cash flow trend—must turn positive to validate profitability claims
- Revenue growth acceleration—2.3% is insufficient to offset cash burn
- Return on assets and equity—must improve materially above current 0.6% and 1.1% levels
Financial Metrics
Revenue
9.2M
Net Income
268.0K
EPS (Diluted)
$0.05
Free Cash Flow
-2.1M
Total Assets
41.4M
Cash
6.7M
Profitability Ratios
Gross Margin
149.1%
Operating Margin
2.8%
Net Margin
2.9%
ROE
1.1%
ROA
0.6%
FCF Margin
-22.6%
Balance Sheet & Liquidity
Current Ratio
1.74x
Quick Ratio
1.74x
Debt/Equity
0.00x
Debt/Assets
39.5%
Interest Coverage
85.00x
Long-term Debt
0.0
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: 2026-04-19T04:42:25.107263 |
Data as of: 2025-06-30 |
Powered by Claude AI