Nephros Inc. Common Stock (NEPH)

FairStock Score: 46/100 — MIXED

Key Financials

Strengths

• Generates $1 million in annual free cash flow (3.4% yield on market cap)
• Solid return on equity of 12.7% above cost of capital
• Conservative balance sheet with debt-to-equity of just 0.10, providing financial flexibility
• Revenue growth of 22.2% demonstrates strong top-line momentum

Concerns

• Trades significantly above Graham Number ($2) with negative 82% margin of safety—limited downside protection
• Altman Z-Score of -8.4 places it in the financial distress zone—elevated bankruptcy risk

AI Analysis

Nephros Inc. Common Stock is a micro-cap healthcare company valued at $30 million. The business generates $19 million in annual revenue with a 0.3% net margin and $1 million in free cash flow. From a quality standpoint, Nephros shows distressed Altman Z-Score of -8.4 warrants caution and adequate 13% ROE. On valuation, the stock is trading at a premium 25.8x earnings, with trades above its Graham Number with a negative 82% margin. Growth dynamics show revenue growing at 22.2% and profit growth of -82.2%. Our composite FairStock Score of 46/100 reflects mixed fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Nephros's 22% revenue growth trajectory could accelerate as it captures additional market share in the healthcare sector. With $1 million in annual free cash flow (3.4% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

Macro headwinds or sector-specific disruption could pressure margins, particularly if competitive intensity increases in the healthcare space. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer