FT

Fortrea Holdings Inc

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Fortrea Holdings Inc AI Insights

Informational only. Not investment advice.
As of 2025-12-18

Snapshot

  • Tangible book value is -1.0B with goodwill at 165% of equity (958M vs 581M) - severe impairment risk if CRO contracts deteriorate[Goodwill]
  • Net loss of -1.0B TTM on 2.8B revenue (-37% net margin) vs industry median 0% - burning cash at unsustainable rate[Net Margin TTM]
  • Debt/equity at 2.04x with 90M TTM interest expense consuming 65% of gross profit (514M) - covenant risk elevated[Debt to Equity]

Watch Triggers

  • Free Cash Flow TTM: Turns positive for 2 consecutive quartersSignals operational turnaround and removes near-term liquidity crisis
  • Gross Margin TTM: Falls below 15% (currently 18.6%)Would indicate pricing pressure or contract losses - accelerates cash burn
  • Total Debt: Increases above 1.3B or covenant breach disclosedDilutive equity raise or restructuring becomes imminent

Bull Case

Trading at 0.55x P/S vs 2.7x industry median - if margins normalize to breakeven, 5x upside to peer valuation

PS RatioOperating Margin TTM

Revenue of 2.8B TTM well above 27M industry median - scale advantage if cost structure can be rationalized

Total Revenue TTMCost of Revenue TTM

Bear Case

ROIC of -45% TTM destroys capital - every dollar invested loses 45 cents annually, unsustainable without equity raise

ROIC TTMInvested Capital

1.2B total debt with 131M cash and negative FCF - refinancing risk acute if credit markets tighten

Total DebtCash and EquivalentsFree Cash Flow TTM

Bull vs Bear Balance

AI-generated sentiment analysis based on fundamental metrics and market conditions.

BearBull
25%

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Forward Thesis

Turnaround unlikely without major restructuring - losses exceed operating capacity to service debt

3-12mhigh
  • Interest expense (90M) vs negative operating income (-67M)
  • FCF negative (-13M TTM) with minimal cash buffer (131M)
  • Working capital near zero (4M) limits operational flexibility
Operating margin -2.4% TTM vs 0% industry medianCash covers only 1.5x quarterly interest expenseNet debt 995M vs 581M equity = 1.7x leverage

Valuation Context

Caveats

Public Strategies Rankings

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Fundamental company data provided by Morningstar, updated daily.

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