STERLING CHECK CORP (STER) Stock Fundamental Analysis

USA - Nasdaq - NASDAQ:STER - US85917T1097 - Common Stock

16.74 USD

-0.04 (-0.24%)

Last: 10/30/2024, 8:00:00 PM

Fundamental Rating

Taking everything into account, STER scores 3 out of 10 in our fundamental rating. STER was compared to 88 industry peers in the Professional Services industry. STER may be in some trouble as it scores bad on both profitability and health. STER is valied quite expensively at the moment, while it does show a decent growth rate.

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1. Profitability

1.1 Basic Checks

In the past year STER was profitable.
In the past year STER had a positive cash flow from operations.
STER had negative earnings in 4 of the past 5 years.
In the past 5 years STER always reported a positive cash flow from operatings.

1.2 Ratios

With a Return On Assets value of -1.04%, STER is not doing good in the industry: 71.79% of the companies in the same industry are doing better.
STER has a Return On Equity of -2.07%. This is in the lower half of the industry: STER underperforms 70.51% of its industry peers.
STER has a Return On Invested Capital of 2.06%. This is in the lower half of the industry: STER underperforms 65.38% of its industry peers.
STER had an Average Return On Invested Capital over the past 3 years of 2.58%. This is significantly below the industry average of 11.85%.

		Industry Rank	Sector Rank
ROA	-1.04%
ROE	-2.07%
ROIC	2.06%

ROA(3y)0.01%

ROA(5y)-1.46%

ROE(3y)0%

ROE(5y)-3.28%

ROIC(3y)2.58%

ROIC(5y)N/A

1.3 Margins

STER has a Operating Margin of 4.56%. This is comparable to the rest of the industry: STER outperforms 44.87% of its industry peers.
With a Gross Margin value of 45.32%, STER perfoms like the industry average, outperforming 52.56% of the companies in the same industry.
In the last couple of years the Gross Margin of STER has declined.

		Industry Rank	Sector Rank
OM	4.56%
PM (TTM)	N/A
GM	45.32%

OM growth 3YN/A

OM growth 5YN/A

PM growth 3YN/A

PM growth 5YN/A

GM growth 3Y-3.7%

GM growth 5YN/A

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), STER is destroying value.
STER has less shares outstanding than it did 1 year ago.
Compared to 1 year ago, STER has a worse debt to assets ratio.

2.2 Solvency

STER has an Altman-Z score of 1.82. This is not the best score and indicates that STER is in the grey zone with still only limited risk for bankruptcy at the moment.
STER's Altman-Z score of 1.82 is on the low side compared to the rest of the industry. STER is outperformed by 69.23% of its industry peers.
The Debt to FCF ratio of STER is 8.97, which is on the high side as it means it would take STER, 8.97 years of fcf income to pay off all of its debts.
STER has a Debt to FCF ratio of 8.97. This is in the lower half of the industry: STER underperforms 60.26% of its industry peers.
A Debt/Equity ratio of 0.73 indicates that STER is somewhat dependend on debt financing.
STER has a Debt to Equity ratio of 0.73. This is in the lower half of the industry: STER underperforms 62.82% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	0.73
Debt/FCF	8.97
Altman-Z	1.82

ROIC/WACC0.24

WACC8.51%

2.3 Liquidity

STER has a Current Ratio of 1.62. This is a normal value and indicates that STER is financially healthy and should not expect problems in meeting its short term obligations.
Looking at the Current ratio, with a value of 1.62, STER is in the better half of the industry, outperforming 61.54% of the companies in the same industry.
A Quick Ratio of 1.62 indicates that STER should not have too much problems paying its short term obligations.
The Quick ratio of STER (1.62) is better than 64.10% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	1.62
Quick Ratio	1.62

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WACC

Debt/Equity

How to determine the health of a company

Altman-Z score

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3. Growth

3.1 Past

The earnings per share for STER have decreased strongly by -12.75% in the last year.
The Revenue has decreased by -0.32% in the past year.
The Revenue has been growing by 16.59% on average over the past years. This is quite good.

EPS 1Y (TTM)-12.75%

EPS 3YN/A

EPS 5YN/A

EPS Q2Q%-17.86%

Revenue 1Y (TTM)-0.32%

Revenue growth 3Y16.59%

Revenue growth 5YN/A

Sales Q2Q%5.33%

3.2 Future

STER is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 9.09% yearly.
The Revenue is expected to grow by 8.13% on average over the next years. This is quite good.

EPS Next Y-8.3%

EPS Next 2Y5.97%

EPS Next 3Y9.09%

EPS Next 5YN/A

Revenue Next Year6.36%

Revenue Next 2Y7.66%

Revenue Next 3Y8.13%

Revenue Next 5YN/A

3.3 Evolution

When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.

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4. Valuation

4.1 Price/Earnings Ratio

Based on the Price/Earnings ratio of 18.81, the valuation of STER can be described as rather expensive.
Based on the Price/Earnings ratio, STER is valued a bit cheaper than the industry average as 66.67% of the companies are valued more expensively.
STER is valuated rather cheaply when we compare the Price/Earnings ratio to 27.21, which is the current average of the S&P500 Index.
Based on the Price/Forward Earnings ratio of 15.06, the valuation of STER can be described as correct.
Based on the Price/Forward Earnings ratio, STER is valued a bit cheaper than 73.08% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of STER to the average of the S&P500 Index (24.26), we can say STER is valued slightly cheaper.

		Industry Rank	Sector Rank
PE	18.81
Fwd PE	15.06

4.2 Price Multiples

STER's Enterprise Value to EBITDA ratio is in line with the industry average.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of STER is on the same level as its industry peers.