Investment Thesis
York Water exhibits financial distress despite profitable operations, with current ratio of 0.72x (working capital negative), minimal cash reserves ($1.0K), and negative free cash flow of -$2.6M that is structurally unsustainable. The company's capital-intensive utility model generates strong operating margins (31.6%) but produces extremely poor returns on equity (2.0%) and assets (0.7%), indicating severe inefficiency in capital deployment and elevated refinancing risk.
Strengths
- Exceptional operating margin of 31.6% demonstrates strong operational efficiency in core utility functions
- Stable utility revenue in essential services with low cyclicality and 20.1M annual revenue base
- Moderate leverage ratio of 0.94x debt/equity suggests reasonable capital structure relative to equity base
Risks
- Severe liquidity crisis with current ratio of 0.72x and near-zero cash ($1.0K) poses imminent refinancing risk and working capital strain
- Negative free cash flow of -2.6M is structurally unsustainable; capital expenditures of 8.0M exceed operating cash flow of 5.4M
- Abysmal capital returns (ROE 2.0%, ROA 0.7%) indicate asset base is not productively deployed despite 689.8M in total assets
Key Metrics to Watch
- Current ratio and absolute cash position (critical working capital adequacy)
- Free cash flow trend and CapEx sustainability (ability to self-fund operations)
- Return on equity and return on assets (capital efficiency and asset value justification)
Financial Metrics
Revenue
20.1M
Net Income
4.8M
EPS (Diluted)
$0.33
Free Cash Flow
-2.7M
Total Assets
689.8M
Cash
1.0K
Profitability Ratios
Gross Margin
N/A
Operating Margin
31.6%
Net Margin
24.0%
ROE
2.0%
ROA
0.7%
FCF Margin
-13.2%
Balance Sheet & Liquidity
Current Ratio
0.72x
Quick Ratio
0.72x
Debt/Equity
0.94x
Debt/Assets
0.0%
Interest Coverage
2.34x
Long-term Debt
227.1M
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: 2026-05-07T11:05:26.583182 |
Data as of: 2026-03-31 |
Powered by Claude AI