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Virco Manufacturing Corp

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Virco Manufacturing Corp AI Insights

Informational only. Not investment advice.
As of 2026-02-06

Snapshot

  • Gross profit TTM down 51% YoY - severe demand destruction in furniture manufacturing segment[Gross Profit 1Y Growth]
  • FCF negative (-4.3M TTM) despite 26.5M cash; inventory at 53M (55% of current assets) signals overstocking[Free Cash Flow]
  • P/E of 27x vs industry median 15x while EPS collapsed 83% YoY - valuation disconnected from fundamentals[P/E Ratio]

Watch Triggers

  • Inventory: Declines >15% without proportional revenue dropSignals liquidation discounting that will crush near-term margins
  • Free Cash Flow: Returns to positive for 2 consecutive quartersWould indicate operational turnaround vs continued cash burn
  • Accounts Receivable: Normalizes below 10M (from 13.8M)33M receivables change suggests collection/customer issues

Bull Case

Trading at 0.9x book value with 113.6M tangible equity and minimal debt (0.37 D/E) provides downside floor

P/B RatioDebt to EquityTangible Book Value

Gross margin 40.8% still above industry median 40.6% - core pricing power intact despite volume decline

Gross MarginOperating Margin

Bear Case

EPS -83% YoY with revenue -3.6% over 5Y suggests structural decline, not cyclical trough

EPS Growth 1YTotal Revenue 5Y Growth

P/CF ratio 61x (vs industry 9x) and negative FCF means no margin of safety at current price

P/CF RatioFree Cash Flow

Bull vs Bear Balance

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

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Forward Thesis

Inventory liquidation cycle will compress margins further before recovery

3-12mhigh
  • 53M inventory vs 202M revenue = 96 days on hand
  • Negative FCF requires working capital drawdown
  • Gross profit halved signals pricing pressure
FCF -4.3M TTM vs positive cash flow priorReceivables jumped 33M (collection issues)Operating margin 2.7% near breakeven

Valuation Context

Caveats

Data Partners
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Fundamental company data provided by Morningstar, updated daily.

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