Investment Thesis
Ziff Davis exhibits severe financial distress with an interest coverage ratio of 0.1x, indicating operating income is insufficient to cover debt service obligations. Negative free cash flow of -$3.2M despite positive net income, combined with anemic returns on equity (1.3%) and assets (0.7%), signals fundamental operational challenges that pose material solvency risk.
Strengths
- Positive net income of $22.3M demonstrates operational profitability
- Adequate cash position of $519.7M provides near-term liquidity cushion
- Modest revenue growth of 3.5% YoY shows market demand persistence
Risks
- Critical interest coverage ratio of 0.1x indicates operating income cannot support debt obligations
- Negative free cash flow of -$3.2M suggests inability to generate cash despite accounting profits
- Extremely poor capital returns (ROE 1.3%, ROA 0.7%) and 19% EPS decline indicate shareholder value destruction
Key Metrics to Watch
- Interest coverage ratio - critical solvency indicator
- Free cash flow trend - must turn positive to validate sustainability
- Operating margin expansion - currently only 1.1%, insufficient to service debt
Financial Metrics
Revenue
267.6M
Net Income
22.3M
EPS (Diluted)
$0.59
Free Cash Flow
-3.2M
Total Assets
3.4B
Cash
519.7M
Profitability Ratios
Gross Margin
317.4%
Operating Margin
1.1%
Net Margin
8.3%
ROE
1.3%
ROA
0.7%
FCF Margin
-1.2%
Balance Sheet & Liquidity
Current Ratio
1.66x
Quick Ratio
1.66x
Debt/Equity
0.50x
Debt/Assets
49.3%
Interest Coverage
0.08x
Long-term Debt
867.1M
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: 2026-05-09T14:03:59.127214 |
Data as of: 2026-03-31 |
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