The ONE Group Hospitality, Inc. — financial distress indicators
Financial-health summary
The ONE Group Hospitality, Inc.'s reported numbers place it in the 'Weak' financial-health band (distress score 61/100). The main indicators are market-implied default probability >20%, severe working-capital shortfall and very high leverage. Independently, the Ohlson accounting model puts its 1-year failure probability at 95% and the market-implied (Merton) default probability is 90.0%. In its favour: operating cash flow is positive over the latest 12 months.
Stress by dimension
Share price — last 12 months
Indicators behind the score
Each red flag shows the evidence from the company’s own filings and the financial or legal principle behind it. Points add to the 0–100 score.
Merton distance-to-default -1.28 σ → PD 90%.
Structural (Merton/KMV) model: equity is a call option on assets; low distance-to-default means assets are close to the default point.
Current ratio is 0.36 (current assets cover 36% of near-term obligations).
Cash-flow insolvency test: inability to pay debts as they fall due is the trigger for both U.S. involuntary petitions and Indian IBC default.
Total debt is 7.7× EBITDA.
Debt above ~6× EBITDA is deep sub-investment-grade territory; refinancing becomes difficult when rates or earnings move against the company.
O-score 3.02 → model probability 95%.
Ohlson (1980) logit model of 1-year corporate failure; O > 0 (p > 50%) is the original failure cut-off.
Recurring net losses.
Repeated losses are a core input in both Ohlson and Altman failure models.
Short-term debt is 50.0× cash on hand.
Maturity wall: debt due within a year must be refinanced, which is the most common proximate cause of filings.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Operating cash flow is positive over the latest 12 months.
- Revenue still growing (+20% YoY).
- High insider/promoter ownership (34%) aligns management with survival.
📰 Recent news scan
- The ONE Group Hospitality (STKS) Edges Up 1.30% to $1.56, Holding Above Key Support - Money Flow Index - www.dars.gov.etGoogle News · 2026-10-04
- Director Scott I. Ross receives 19,531 shares in ONE Group Hospitality (STKS) at $0 per share. - Stock TitanGoogle News · 2026-10-02
- After a stock award, Chambers directly holds 116,609 shares in ONE Group Hospitality (STKS). - Stock TitanGoogle News · 2026-10-02
- ONE Group Hospitality (NASDAQ:STKS) Stock Crosses Below Two Hundred Day Moving Average - Here's What Happened - MarketBeatGoogle News · 2026-09-26
- US$4.61: That's What Analysts Think The ONE Group Hospitality, Inc. (NASDAQ:STKS) Is Worth After Its Latest Results - Simply Wall StreetGoogle News · 2026-08-12
- The ONE Group: A Restaurant Stock With Rising Traffic, Expanding Margins – Quarterly Update Report - Yahoo FinanceGoogle News · 2026-08-10
⚖️ U.S. legal pathway — Title 11, U.S. Code
Which chapter would apply?
- Chapter 11 — reorganisation. Management usually stays in control as debtor-in-possession; the automatic stay (§362) halts collection; a plan must meet the best-interests test (§1129(a)(7)) and the absolute priority rule (§1129(b)) — creditors are paid before shareholders, who are frequently wiped out.
- Chapter 7 — liquidation. A trustee sells assets and distributes proceeds by statutory priority (§§507, 726).
- Subchapter V (“Chapter 5”) is a fast track for small-business debtors under a statutory debt cap, but SEC-reporting companies are excluded (§101(51D)) — so it rarely applies to listed companies.
What typically triggers a filing
- Payment default or covenant breach lenders will not waive; a debt maturity that cannot be refinanced.
- Auditor going-concern doubt (ASC 205-40 / PCAOB AS 2415) — often itself a default trigger in loan agreements.
- Creditors can force a case with an involuntary petition (§303) if debts are not paid as they come due.
- Delisting after sustained sub-$1 prices or equity deficits cuts off equity funding.
Transactions shortly before filing can be clawed back (preferences — 90 days, §547; fraudulent transfers — 2 years, §548).
Frequently asked questions
What do The ONE Group Hospitality, Inc.'s financial-health indicators show?
As of 2026-10-08, The ONE Group Hospitality, Inc.'s public financial data places it in the 'Weak' band with a distress score of 61/100, driven by market-implied default probability >20%, severe working-capital shortfall and very high leverage. This is a statistical screen of reported numbers — it does not mean the company is insolvent, has defaulted or will enter insolvency proceedings.
What is The ONE Group Hospitality, Inc.'s financial distress score?
61/100 ('Weak'). Ohlson O-score 3.02 (model 1-year failure probability 95%). Merton distance-to-default -1.28 σ (model default probability 90.0%).
What works in The ONE Group Hospitality, Inc.'s favour?
Operating cash flow is positive over the latest 12 months. Revenue still growing (+20% YoY). High insider/promoter ownership (34%) aligns management with survival.
How are shareholders treated if a company enters insolvency?
In a Chapter 11 reorganisation the absolute priority rule pays secured lenders, then unsecured creditors, before shareholders — so existing shares are usually cancelled or heavily diluted. In Chapter 7 the company is liquidated and shareholders rarely recover anything.
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Methodology
Score = capped sum of rule-based red flags across seven dimensions (liquidity, solvency, profitability, cash flow, sales trend, market signal, news). Ohlson O-score (1980) gives an accounting-based 1-year failure probability; Merton distance-to-default (Bharath & Shumway 2008) gives a market-implied probability. Financial institutions use a capital-based rule set. Recalculated every trading day from the latest filings, prices and news.