Investment Thesis
Yunhong Green CTI is operationally insolvent with negative operating income (-10.4% margin), negative free cash flow (-$240K), and critically low cash reserves ($97K). Despite 9.8% revenue growth, the company is burning cash operationally with an interest coverage ratio of -3.3x, indicating inability to service debt from operations and unsustainable financial trajectory.
Strengths
- Revenue growth of 9.8% year-over-year shows market demand exists
- Moderate debt-to-equity ratio of 0.82x suggests capital structure is not overleveraged relative to assets
- Gross margin of 18.2% provides some contribution toward fixed costs
Risks
- Critical liquidity crisis with only $97K cash against negative operating cash flow of -$172K; company has limited runway to survive
- Deeply negative operating margins (-10.4%) and net margins (-12.8%) indicate fundamental business model dysfunction at current scale
- Unable to cover interest expenses from operations (interest coverage -3.3x); long-term debt service sustainability is at severe risk
- Negative free cash flow of -$240K means unprofitable growth is destroying shareholder value rather than creating it
- Zero insider stock purchases in last 90 days suggests complete lack of management confidence in turnaround
Key Metrics to Watch
- Operating cash flow trend and return to positive territory (currently -$172K)
- Operating margin expansion from -10.4% toward breakeven as critical survival metric
- Cash balance trajectory given $97K cash position against negative FCF burn rate
Financial Metrics
Revenue
19.7M
Net Income
-2.5M
EPS (Diluted)
$-1.01
Free Cash Flow
-240.0K
Total Assets
22.5M
Cash
97.0K
Profitability Ratios
Gross Margin
18.2%
Operating Margin
-10.4%
Net Margin
-12.8%
ROE
-29.6%
ROA
-11.3%
FCF Margin
-1.2%
Balance Sheet & Liquidity
Current Ratio
1.41x
Quick Ratio
0.59x
Debt/Equity
0.82x
Debt/Assets
61.9%
Interest Coverage
-3.26x
Long-term Debt
7.0M
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: 2026-04-19T18:21:23.999241 |
Data as of: 2025-12-31 |
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