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STERLING CHECK CORP (STER) Stock Fundamental Analysis

NASDAQ:STER - Nasdaq - US85917T1097 - Common Stock - Currency: USD

16.74  -0.04 (-0.24%)

Fundamental Rating

3

STER gets a fundamental rating of 3 out of 10. The analysis compared the fundamentals against 81 industry peers in the Professional Services industry. Both the profitability and financial health of STER have multiple concerns. While showing a medium growth rate, STER is valued expensive at the moment.


Dividend Valuation Growth Profitability Health

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2

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.
STER Yearly Net Income VS EBIT VS OCF VS FCFSTER Yearly Net Income VS EBIT VS OCF VS FCFYearly Net Income VS EBIT VS OCF VS FCF 2019 2020 2021 2022 2023 0 50M -50M 100M

1.2 Ratios

STER has a worse Return On Assets (-1.04%) than 71.79% of its industry peers.
With a Return On Equity value of -2.07%, STER is not doing good in the industry: 70.51% of the companies in the same industry are doing better.
STER has a worse Return On Invested Capital (2.06%) than 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 12.53%.
Industry RankSector 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
STER Yearly ROA, ROE, ROICSTER Yearly ROA, ROE, ROICYearly ROA, ROE, ROIC 2019 2020 2021 2022 2023 0 2 -2 -4 -6 -8

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.
STER has a Gross Margin (45.32%) which is comparable to the rest of the industry.
In the last couple of years the Gross Margin of STER has declined.
Industry RankSector 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
STER Yearly Profit, Operating, Gross MarginsSTER Yearly Profit, Operating, Gross MarginsYearly Profit, Operating, Gross Margins 2019 2020 2021 2022 2023 0 20 40

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3

2. Health

2.1 Basic Checks

STER has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
STER has less shares outstanding than it did 1 year ago.
The debt/assets ratio for STER is higher compared to a year ago.
STER Yearly Shares OutstandingSTER Yearly Shares OutstandingYearly Shares Outstanding 2019 2020 2021 2022 2023 20M 40M 60M 80M
STER Yearly Total Debt VS Total AssetsSTER Yearly Total Debt VS Total AssetsYearly Total Debt VS Total Assets 2019 2020 2021 2022 2023 500M 1B

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.
Looking at the Altman-Z score, with a value of 1.82, STER is doing worse than 69.23% of the companies in the same industry.
STER has a debt to FCF ratio of 8.97. This is a slightly negative value and a sign of low solvency as STER would need 8.97 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 8.97, STER is doing worse than 60.26% of the companies in the same industry.
A Debt/Equity ratio of 0.73 indicates that STER is somewhat dependend on debt financing.
The Debt to Equity ratio of STER (0.73) is worse than 62.82% of its industry peers.
Industry RankSector Rank
Debt/Equity 0.73
Debt/FCF 8.97
Altman-Z 1.82
ROIC/WACC0.24
WACC8.51%
STER Yearly LT Debt VS Equity VS FCFSTER Yearly LT Debt VS Equity VS FCFYearly LT Debt VS Equity VS FCF 2019 2020 2021 2022 2023 200M 400M 600M

2.3 Liquidity

A Current Ratio of 1.62 indicates that STER should not have too much problems paying 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.
STER has a Quick 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.
The Quick ratio of STER (1.62) is better than 64.10% of its industry peers.
Industry RankSector Rank
Current Ratio 1.62
Quick Ratio 1.62
STER Yearly Current Assets VS Current LiabilitesSTER Yearly Current Assets VS Current LiabilitesYearly Current Assets VS Current Liabilites 2019 2020 2021 2022 2023 50M 100M 150M 200M 250M

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4

3. Growth

3.1 Past

The earnings per share for STER have decreased strongly by -12.75% in the last year.
Looking at the last year, STER shows a decrease in Revenue. The Revenue has decreased by -0.32% in the last year.
Measured over the past years, STER shows a quite strong growth in Revenue. The Revenue has been growing by 16.59% on average per year.
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.
Based on estimates for the next years, STER will show a quite strong growth in Revenue. The Revenue will grow by 8.13% on average per year.
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.
STER Yearly Revenue VS EstimatesSTER Yearly Revenue VS EstimatesYearly Revenue VS Estimates 2019 2020 2021 2022 2023 2024 2025 2026 200M 400M 600M 800M
STER Yearly EPS VS EstimatesSTER Yearly EPS VS EstimatesYearly EPS VS Estimates 2021 2022 2023 2024 2025 2026 0.2 0.4 0.6 0.8 1

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3

4. Valuation

4.1 Price/Earnings Ratio

STER is valuated rather expensively with a Price/Earnings ratio of 18.81.
66.67% of the companies in the same industry are more expensive than STER, based on the Price/Earnings ratio.
Compared to an average S&P500 Price/Earnings ratio of 27.21, STER is valued a bit cheaper.
Based on the Price/Forward Earnings ratio of 15.06, the valuation of STER can be described as correct.
73.08% of the companies in the same industry are more expensive than STER, based on the Price/Forward Earnings ratio.
STER's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 21.70.
Industry RankSector Rank
PE 18.81
Fwd PE 15.06
STER Price Earnings VS Forward Price EarningsSTER Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 5 10 15 20 25

4.2 Price Multiples

STER's Enterprise Value to EBITDA ratio is in line with the industry average.
STER's Price/Free Cash Flow ratio is in line with the industry average.
Industry RankSector Rank
P/FCF 26.62
EV/EBITDA 21.88
STER Per share dataSTER EPS, Sales, OCF, FCF, BookValue per sharePer Share Data Per Share 0 2 -2 4 -4 6

4.3 Compensation for Growth

PEG (NY)N/A
PEG (5Y)N/A
EPS Next 2Y5.97%
EPS Next 3Y9.09%

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0

5. Dividend

5.1 Amount

STER does not give a dividend.
Industry RankSector Rank
Dividend Yield N/A

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STERLING CHECK CORP

NASDAQ:STER (10/30/2024, 8:00:00 PM)

16.74

-0.04 (-0.24%)

Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryProfessional Services
Earnings (Last)11-08 2024-11-08/amc
Earnings (Next)N/A N/A
Inst Owners84.64%
Inst Owner Change-99.97%
Ins Owners0.47%
Ins Owner Change0%
Market Cap1.64B
Analysts52.31
Price Target16.83 (0.54%)
Short Float %N/A
Short RatioN/A
Dividend
Industry RankSector Rank
Dividend Yield N/A
Yearly DividendN/A
Dividend Growth(5Y)N/A
DPN/A
Div Incr Years0
Div Non Decr Years0
Ex-DateN/A
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-22.66%
Min EPS beat(2)-29.87%
Max EPS beat(2)-15.44%
EPS beat(4)0
Avg EPS beat(4)-18.8%
Min EPS beat(4)-29.87%
Max EPS beat(4)-13.71%
EPS beat(8)2
Avg EPS beat(8)-11.35%
EPS beat(12)6
Avg EPS beat(12)0.84%
EPS beat(16)N/A
Avg EPS beat(16)N/A
Revenue beat(2)1
Avg Revenue beat(2)-0.46%
Min Revenue beat(2)-1.66%
Max Revenue beat(2)0.74%
Revenue beat(4)1
Avg Revenue beat(4)-3.29%
Min Revenue beat(4)-8.28%
Max Revenue beat(4)0.74%
Revenue beat(8)1
Avg Revenue beat(8)-2.85%
Revenue beat(12)5
Avg Revenue beat(12)1.14%
Revenue beat(16)N/A
Avg Revenue beat(16)N/A
PT rev (1m)2.01%
PT rev (3m)2.01%
EPS NQ rev (1m)-11.11%
EPS NQ rev (3m)-18.42%
EPS NY rev (1m)-4.93%
EPS NY rev (3m)-11.63%
Revenue NQ rev (1m)-0.38%
Revenue NQ rev (3m)-1.31%
Revenue NY rev (1m)0.89%
Revenue NY rev (3m)-0.1%
Valuation
Industry RankSector Rank
PE 18.81
Fwd PE 15.06
P/S 2.23
P/FCF 26.62
P/OCF 19.5
P/B 2.23
P/tB N/A
EV/EBITDA 21.88
EPS(TTM)0.89
EY5.32%
EPS(NY)1.11
Fwd EY6.64%
FCF(TTM)0.63
FCFY3.76%
OCF(TTM)0.86
OCFY5.13%
SpS7.52
BVpS7.49
TBVpS-4.32
PEG (NY)N/A
PEG (5Y)N/A
Profitability
Industry RankSector Rank
ROA -1.04%
ROE -2.07%
ROCE 2.6%
ROIC 2.06%
ROICexc 2.18%
ROICexgc 44.9%
OM 4.56%
PM (TTM) N/A
GM 45.32%
FCFM 8.37%
ROA(3y)0.01%
ROA(5y)-1.46%
ROE(3y)0%
ROE(5y)-3.28%
ROIC(3y)2.58%
ROIC(5y)N/A
ROICexc(3y)2.75%
ROICexc(5y)N/A
ROICexgc(3y)51.21%
ROICexgc(5y)N/A
ROCE(3y)3.27%
ROCE(5y)N/A
ROICexcg growth 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3YN/A
ROICexc growth 5YN/A
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
F-Score3
Asset Turnover0.5
Health
Industry RankSector Rank
Debt/Equity 0.73
Debt/FCF 8.97
Debt/EBITDA 5.55
Cap/Depr 35.59%
Cap/Sales 3.06%
Interest Coverage 0.91
Cash Conversion 86.87%
Profit Quality N/A
Current Ratio 1.62
Quick Ratio 1.62
Altman-Z 1.82
F-Score3
WACC8.51%
ROIC/WACC0.24
Cap/Depr(3y)27.76%
Cap/Depr(5y)27.08%
Cap/Sales(3y)2.81%
Cap/Sales(5y)3.7%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)-12.75%
EPS 3YN/A
EPS 5YN/A
EPS Q2Q%-17.86%
EPS Next Y-8.3%
EPS Next 2Y5.97%
EPS Next 3Y9.09%
EPS Next 5YN/A
Revenue 1Y (TTM)-0.32%
Revenue growth 3Y16.59%
Revenue growth 5YN/A
Sales Q2Q%5.33%
Revenue Next Year6.36%
Revenue Next 2Y7.66%
Revenue Next 3Y8.13%
Revenue Next 5YN/A
EBIT growth 1Y-27.27%
EBIT growth 3YN/A
EBIT growth 5YN/A
EBIT Next Year23.82%
EBIT Next 3Y15.9%
EBIT Next 5YN/A
FCF growth 1Y71.64%
FCF growth 3Y57.18%
FCF growth 5YN/A
OCF growth 1Y48.64%
OCF growth 3Y38.83%
OCF growth 5YN/A