Climb Global Solutions, Inc. (NASDAQ: CLMB)

Sector: Technology Industry: Electronics & Computer Distribution CIK: 0000945983
Market Cap 512.19 Mn
P/B 10.54
P/E 80.43
P/S 1.89
ROIC (Qtr) 21.48
Div Yield % 0.72
Rev 1y % (Qtr) 35.19
Total Debt (Qtr) 1.74 Mn
Debt/Equity (Qtr) 0.02
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About

Climb Global Solutions, Inc., or CLMB, operates as a value-added information technology (IT) distribution and solutions company, serving customers through two primary segments: Distribution and Solutions. Incorporated in Delaware in 1982, Climb Global Solutions has established itself as a key player in the IT industry, with its stock publicly traded on the NASDAQ Global Market. The Distribution segment stands as the backbone of Climb Global Solutions' operations, contributing approximately 92% of the company's consolidated net sales and 83% of...

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Investment thesis

Bull case

  • Strong operating cash flow of 44.48M provides robust 25.58x coverage of total debt 1.74M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 49.84M provide 149.23x coverage of short-term debt 334000, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 305.55M provides 175.70x coverage of total debt 1.74M, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 40.93M exceeds capital expenditure of 3.55M by 11.53x, indicating strong organic growth funding capability.
  • Robust tangible asset base of 305.55M provides 11.15x coverage of working capital 27.39M, indicating strong operational backing.

Bear case

  • Operating cash flow of 44.48M barely covers its investment activities of (3.84M), with a coverage ratio of -11.59, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 44.48M provides thin coverage of dividend payments of (3.07M) with a -14.50 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 49.84M provide limited coverage of acquisition spending of (286000), which is -174.27x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • High receivables of 225.35M relative to inventory of 3.19M (70.71 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • Free cash flow of 40.93M represents just -74.96x of debt issuance (546000), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Geographical Breakdown of Revenue (2024)

Timing of Transfer of Good or Service Breakdown of Revenue (2024)

Peer comparison

Companies in the Electronics & Computer Distribution
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 ARW Arrow Electronics, Inc. 7.91 Bn 13.85 0.26 3.09 Bn
2 SNX Td Synnex Corp 6.38 Bn 23.20 0.33 4.61 Bn
3 AVT Avnet Inc 5.42 Bn 26.12 0.23 3.17 Bn
4 NSIT Insight Enterprises Inc 2.61 Bn 16.60 0.32 1.36 Bn
5 CNXN Pc Connection Inc 1.63 Bn 18.18 0.51 0.00 Bn
6 SCSC Scansource, Inc. 0.82 Bn 11.15 0.27 0.10 Bn
7 CLMB Climb Global Solutions, Inc. 0.51 Bn 80.43 1.89 0.00 Bn
8 IZM ICZOOM Group Inc. 0.01 Bn 10.40 0.07 -

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.28 0.78
EV to Cash from Ops. EV/CFO 719.30 117.90
EV to Debt EV to Debt 276.30 438.44
EV to EBIT EV/EBIT 56.30 15.47
EV to EBITDA EV/EBITDA 49.09 13.22
EV to Free Cash Flow [EV/FCF] EV/FCF 970.69 113.72
EV to Market Cap EV to Market Cap 0.94 1.17
EV to Revenue EV/Rev 1.78 0.54
Price to Book Value [P/B] P/B 10.54 2.70
Price to Earnings [P/E] P/E 80.43 21.87
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 6.96 2.26
Dividend Payout Ratio % Div Payout % (Qtr) 14.60 11.51
Dividend per Basic Share Div per Share (Qtr) 0.68 0.49
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 7.54 10.45
Interest Coverage Int. cover (Qtr) -37.91 -0.62
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 19.34 9.50
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 125.13 97.84
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 6.75
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 28.59 -1,335.47
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 39.88 -783.61
EBIT Growth (1y) % EBIT 1y % (Qtr) 28.40 -8,097.95
EBT Growth (1y) % EBT 1y % (Qtr) 26.33 -8,103.00
EPS Growth (1y) % EPS 1y % (Qtr) 26.02 22.53
FCF Growth (1y) % FCF 1y % (Qtr) 138.93 -1,628.21
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 31.86 3.71
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.65 2.10
Cash Payout Ratio Cash Payout (Qtr) 0.06 0.07
Cash Ratio Cash Ratio (Qtr) 0.19 0.63
Current Ratio Curr Ratio (Qtr) 1.11 2.37
Debt to Equity Ratio Debt/Equity (Qtr) 0.02 0.40
Interest Cover Ratio Int Coverage (Qtr) -37.91 -0.62
Times Interest Earned Times Interest Earned (Qtr) -37.91 -0.62
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 5.60 0.27
EBIT Margin % EBIT Margin % (Qtr) 4.42 -0.41
EBT Margin % EBT Margin % (Qtr) 4.53 -0.82
Gross Margin % Gross Margin % (Qtr) 17.20 12.10
Net Profit Margin % Net Margin % (Qtr) 3.40 -1.39