Grid Dynamics Holdings, Inc. (NASDAQ: GDYN)

Sector: Technology Industry: Information Technology Services CIK: 0001743725
Market Cap 796.71 Mn
P/B 1.48
P/E 57.38
P/S 1.96
ROIC (Qtr) -0.08
Div Yield % 0.00
Rev 1y % (Qtr) 19.13
Total Debt (Qtr) 13.65 Mn
Debt/Equity (Qtr) 0.03

About

Grid Dynamics Holdings, Inc. (GDYN) is a prominent player in the technology consulting and engineering services industry. With a focus on digital transformation, the company offers a comprehensive range of services to enterprise companies, including cloud platform and product engineering, AI/machine learning and data platform engineering, digital engagement, and supply chain, IoT, and advanced manufacturing. Grid Dynamics operates in a dynamic industry, characterized by rapid technological advancements and evolving business needs. The company's...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 37.77M provides robust 2.77x coverage of total debt 13.65M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 338.55M provide 64.06x coverage of short-term debt 5.29M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 485.09M provides 35.54x coverage of total debt 13.65M, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 23.59M exceeds capital expenditure of 14.18M by 1.66x, indicating strong organic growth funding capability.
  • Tangible assets of 485.09M provide robust 10.34x coverage of other current liabilities 46.93M, indicating strong asset backing.

Bear case

  • Operating cash flow of 37.77M barely covers its investment activities of (21.33M), with a coverage ratio of -1.77, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (21.33M) provide weak support for R&D spending of 24.39M, which is -0.87x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 338.55M provide limited coverage of acquisition spending of (10.73M), which is -31.55x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • The company's operating cash flow of 37.77M shows concerning coverage of stock compensation expenses of 32.01M, with a 1.18 ratio indicating potential earnings quality issues.
  • Operating earnings of 18.66M show weak coverage of depreciation charges of 24.27M, with a 0.77 ratio indicating high capital intensity and potential reinvestment needs.

Peer comparison

Companies in the Information Technology Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 IBM International Business Machines Corp 279.99 Bn 35.41 4.28 66.57 Bn
2 ACN Accenture plc 168.17 Bn 22.09 2.38 8.20 Bn
3 INFY Infosys Ltd 74.96 Bn 23.74 3.89 -
4 CTSH Cognizant Technology Solutions Corp 41.45 Bn 19.48 1.99 1.17 Bn
5 FIS Fidelity National Information Services, Inc. 35.21 Bn 231.62 3.36 13.00 Bn
6 WIT Wipro Ltd 29.93 Bn 19.70 2.97 1.95 Bn
7 BR Broadridge Financial Solutions, Inc. 26.38 Bn 28.51 3.74 3.28 Bn
8 LDOS Leidos Holdings, Inc. 23.72 Bn 16.88 1.37 5.23 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.78 1.44
EV to Cash from Ops. EV/CFO 12.58 5.63
EV to Debt EV to Debt 34.82 8.06
EV to EBIT EV/EBIT 25.47 -4.05
EV to EBITDA EV/EBITDA 20.54 -0.52
EV to Free Cash Flow [EV/FCF] EV/FCF 20.14 -1.66
EV to Market Cap EV to Market Cap 0.60 1.35
EV to Revenue EV/Rev 1.17 57.14
Price to Book Value [P/B] P/B 1.48 3.34
Price to Earnings [P/E] P/E 57.38 -5.47
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 -0.83
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 0.66
Dividend per Basic Share Div per Share (Qtr) 0.00 0.47
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 6.24
Interest Coverage Interest Coverage 0.00 -319.17
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -24.33 -253.62
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 46.39 114.15
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 35.23
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 474.04 -22.49
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 92.50 -25.03
EBIT Growth (1y) % EBIT 1y % (Qtr) 174.62 -82.44
EBT Growth (1y) % EBT 1y % (Qtr) 174.62 97.07
EPS Growth (1y) % EPS 1y % (Qtr) 300.00 147.29
FCF Growth (1y) % FCF 1y % (Qtr) 22.36 -8,638.64
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 21.33 -8.24
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.66 0.78
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.01
Cash Ratio Cash Ratio (Qtr) 5.86 0.66
Current Ratio Curr Ratio (Qtr) 7.63 2.12
Debt to Equity Ratio Debt/Equity (Qtr) 0.03 0.88
Interest Cover Ratio Interest Cover Ratio 0.00 -319.17
Times Interest Earned Times Interest Earned 0.00 -319.17
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 10.60 -550.76
EBIT Margin % EBIT Margin % (Qtr) 4.60 -775.74
EBT Margin % EBT Margin % (Qtr) 4.60 -827.89
Gross Margin % Gross Margin % (Qtr) 35.30 24.07
Net Profit Margin % Net Margin % (Qtr) 3.40 -830.34