IREN Ltd (NASDAQ: IREN)

Sector: Financial Services Industry: Capital Markets CIK: 0001878848
Market Cap 10.09 Bn
P/B 5.37
P/E 29.51
P/S 22.37
ROIC (Qtr) -0.06
Div Yield % 0.00
Rev 1y % (Qtr) 331.60
Total Debt (Qtr) 631.13 Mn
Debt/Equity (Qtr) 0.34

About

Iris Energy Ltd, or IREN, operates in the data center and high-performance computing (HPC) industries, with a focus on renewable energy. The company was established in 2018 and is listed on the Nasdaq Global Select Market under the ticker symbol IREN. IREN's primary business activities encompass Bitcoin mining and HPC solutions, including AI Cloud Services. IREN generates revenue through its Bitcoin mining operations, where it earns Bitcoin through a combination of block rewards and transaction fees from the operation of its specialized computers,...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 288.65M provides robust 0.46x coverage of total debt 631.13M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 674.68M provide 2580.66x coverage of short-term debt 261437.91, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 288.65M provides exceptional 21.80x coverage of interest expenses 13.24M, showing strong debt service capability.
  • Strong tangible asset base of 2.79B provides 4.42x coverage of total debt 631.13M, indicating robust asset backing and low credit risk.
  • Strong operating cash flow of 288.65M provides 1.65x coverage of SG&A expenses 174.57M, showing efficient operational cost management.

Bear case

  • Operating cash flow of 288.65M barely covers its investment activities of (865.23M), with a coverage ratio of -0.33, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Free cash flow of (544.31M) provides weak coverage of capital expenditures of 832.96M, with a -0.65 ratio suggesting additional external financing needs for growth initiatives.
  • Free cash flow of (544.31M) represents just -1.20x of debt issuance 452.51M, suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Operating cash flow of 288.65M barely covers operating expenses of (33.43M) with a -8.63 ratio, suggesting thin operational efficiency margins and limited flexibility.
  • High financing cash flow of 1.19B relative to working capital of 601.43M, which is 1.97x suggests concerning dependence on external funding for operational needs.

Peer comparison

Companies in the Capital Markets
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 GS Goldman Sachs Group Inc 284.23 Bn 17.94 4.84 911.32 Bn
2 MS Morgan Stanley 279.63 Bn 17.97 4.05 353.12 Bn
3 SCHW Schwab Charles Corp 179.33 Bn 23.09 7.83 27.59 Bn
4 HOOD Robinhood Markets, Inc. 106.92 Bn 48.73 25.43 0.00 Bn
5 CRCL Circle Internet Group, Inc. 40.97 Bn 261.00 24.22 0.15 Bn
6 IBKR Interactive Brokers Group, Inc. 28.23 Bn 30.79 4.75 28.43 Bn
7 LPLA LPL Financial Holdings Inc. 27.60 Bn 33.13 1.77 7.52 Bn
8 FUTU Futu Holdings Ltd 22.89 Bn 18.13 8.54 1.75 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.09 1.07
EV to Cash from Ops. EV/CFO 20.23 15.33
EV to Debt EV to Debt 9.25 21.89
EV to EBIT EV/EBIT 12.08 -0.80
EV to EBITDA EV/EBITDA 44.73 11.20
EV to Free Cash Flow [EV/FCF] EV/FCF -10.73 43.08
EV to Market Cap EV to Market Cap 0.58 -0.05
EV to Revenue EV/Rev 12.95 12.82
Price to Book Value [P/B] P/B 5.37 3.09
Price to Earnings [P/E] P/E 29.51 6.20
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 4.22
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 10.37
Dividend per Basic Share Div per Share (Qtr) 0.00 0.70
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 -8.68
Interest Coverage Int. cover (Qtr) 36.50 37.53
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -39.87 -12,429.64
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 892.29 1,588.78
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 4.88
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 777.72 270.93
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 0.00 333.57
EBIT Growth (1y) % EBIT 1y % (Qtr) 1,082.60 3,103.22
EBT Growth (1y) % EBT 1y % (Qtr) 1,054.53 3,039.53
EPS Growth (1y) % EPS 1y % (Qtr) 470.14 24.25
FCF Growth (1y) % FCF 1y % (Qtr) -0.55 -80.08
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 838.70 51.33
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.11 0.42
Cash Payout Ratio Cash Payout (Qtr) 0.00 -0.08
Cash Ratio Cash Ratio (Qtr) 5.07 2.01
Current Ratio Curr Ratio (Qtr) 5.52 3.47
Debt to Equity Ratio Debt/Equity (Qtr) 0.34 1.46
Interest Cover Ratio Int Coverage (Qtr) 36.50 37.53
Times Interest Earned Times Interest Earned (Qtr) 36.50 37.53
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 0.00 76.68
EBIT Margin % EBIT Margin % (Qtr) 163.95 46.81
EBT Margin % EBT Margin % (Qtr) 104.22 58.57
Gross Margin % Gross Margin % (Qtr) 31.00 53.60
Net Profit Margin % Net Margin % (Qtr) 75.80 29.41