Star Equity Holdings, Inc. (STRR) Stock Analysis and Metrics

Sector: Healthcare Industry: Diagnostics & Research CIK: 0001210708

P/B 0.49

P/E -6.83

P/S 0.22

Market Cap 33.21 Mn

ROIC (Qtr) -6.54

Div Yield % 0.00

Rev 1y % (Qtr) 30.14

Total Debt (Qtr) 22.99 Mn

Debt/Equity (Qtr) 0.34

About

Hudson Global, Inc., represented by the ticker symbol HSON, is a prominent player in the total talent solutions industry, operating under the Hudson RPO brand. The company specializes in delivering customized recruitment outsourcing and comprehensive talent solutions to organizations across the globe. Hudson Global's approach is centered on developing tailored talent solutions that cater to its clients' strategic growth objectives. The company's core business activities encompass a global presence, with direct operations in fourteen countries....

Hudson Global, Inc., represented by the ticker symbol HSON, is a prominent player in the total talent solutions industry, operating under the Hudson RPO brand. The company specializes in delivering customized recruitment outsourcing and comprehensive talent solutions to organizations across the globe. Hudson Global's approach is centered on developing tailored talent solutions that cater to its clients' strategic growth objectives.

The company's core business activities encompass a global presence, with direct operations in fourteen countries. Hudson Global organizes its business into three reportable geographic segments: Americas, Asia Pacific, and Europe. In 2023, the revenue distribution among these segments was as follows: Americas - $31,254 (19.4%), Asia Pacific - $103,857 (64.4%), and Europe - $26,227 (16.2%).

Hudson Global's primary service offerings consist of Recruitment Process Outsourcing (RPO) and contracting services. RPO encompasses comprehensive recruitment outsourcing, project-based outsourcing, and recruitment consulting for clients' permanent staffing requirements. Contracting services offer clients a variety of outsourced professional contract staffing services, managed service provider services, or a blend of both, tailored to clients' needs.

The company's competitive landscape is characterized by numerous players, minimal barriers to entry, and considerable market fragmentation. Competition in this industry is primarily based on factors such as candidate and position knowledge, industry expertise, global presence, scalability, service quality, and efficiency in completing assignments. In response, Hudson Global focuses on organic growth of its RPO business, reducing overhead expenses as a percentage of revenue, and pursuing strategic acquisition opportunities.

Hudson Global's clients consist primarily of mid-to-large-cap multinational companies and government agencies. Notably, over 85% of the company's revenue in 2023 was generated by its top 25 clients, with two clients accounting for 50% of revenue in both 2023 and 2022. The company's reliance on a smaller group of clients underscores the importance of maintaining strong relationships and delivering high-quality services.

The Hudson RPO brand includes an array of services that support its clients' talent needs. These services include Hudson RPO, Hudson MSP, Hudson Talent Management, Hudson Talent Solutions, Hudson Contract, and Hudson ETS. Each of these services contributes to the company's mission of providing innovative and customized talent solutions to organizations worldwide.

Hudson Global's success hinges on its workforce, comprising approximately 1,050 employees worldwide, with about 120 based in the United States and 930 located internationally. The company prioritizes the acquisition, investment, and retention of top talent through its well-being program, Thrive. This program supports employees' physical, mental, and financial health and well-being, demonstrating Hudson Global's commitment to its workforce.

In addition, Hudson Global recognizes the importance of environmental, social, and governance (ESG) matters, with a particular focus on human capital management. This focus is integral to the company's long-term business strategy, as it strives to create a sustainable foundation for its future growth and success.

Stock Price Chart

Analysis

Pros

Healthy cash reserves of 16.58M provide 2.37x coverage of short-term debt 7M, demonstrating strong liquidity position and minimal refinancing risk.
Operating cash flow of (1.38M) provides exceptional 10.23x coverage of interest expenses (135000), showing strong debt service capability.
Strong tangible asset base of 109.30M provides 4.75x coverage of total debt 22.99M, indicating robust asset backing and low credit risk.
Tangible assets of 109.30M provide exceptional 31.91x coverage of deferred revenue 3.42M, showing strong service capability backing.
Free cash flow of (1.89M) provides exceptional 14.01x coverage of interest expense (135000), showing strong debt service ability.

Cons

Operating cash flow of (1.38M) barely covers its investment activities of 6.16M, with a coverage ratio of -0.22, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
Operating cash flow of (1.38M) provides insufficient coverage of deferred revenue obligations of 3.42M, which is -0.40x, raising concerns about future service delivery capabilities.
The company's operating cash flow of (1.38M) shows concerning coverage of stock compensation expenses of 1.23M, with a -1.12 ratio indicating potential earnings quality issues.
High receivables of 36.24M relative to inventory of 7.75M (4.68 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
Free cash flow of (1.89M) provides weak coverage of capital expenditures of 511000, with a -3.70 ratio suggesting additional external financing needs for growth initiatives.

Peer Comparison

Companies in the Diagnostics & Research

S.No.	Ticker	Company	Market Cap	P/E	P/S	Total Debt (Qtr)
1	TMO	Thermo Fisher Scientific Inc.	216.83 Bn	33.00	4.96	35.68 Bn
2	DHR	Danaher Corp /De/	162.47 Bn	46.38	6.69	16.86 Bn
3	IDXX	Idexx Laboratories Inc /De	56.88 Bn	55.36	13.65	1.09 Bn
4	A	Agilent Technologies, Inc.	39.82 Bn	32.64	5.87	3.41 Bn
5	IQV	Iqvia Holdings Inc.	38.85 Bn	30.28	2.44	15.19 Bn
6	NTRA	Natera, Inc.	31.32 Bn	-101.29	14.80	0.18 Bn
7	MTD	Mettler Toledo International Inc/	28.99 Bn	34.68	7.35	2.21 Bn
8	WAT	Waters Corp /De/	22.92 Bn	35.32	7.38	1.49 Bn

Industry Comparisons

Current Valuation

Metric	Value	Industry
EV to Assets	0.14	2.69
EV to Cash from Ops.	-12.20	18.14
EV to Debt	0.73	52.51
EV to EBIT	-4.86	19.22
EV to EBITDA	-7.69	4.35
EV to Free Cash Flow [EV/FCF]	-8.90	2.84
EV to Market Cap	0.51	1.52
EV to Revenue	0.11	4.79
Price to Book Value [P/B]	0.49	1.34
Price to Earnings [P/E]	-6.83	22.02

Dividend Metrics

Metric	Value	Industry
Dividend Coverage Ratio	-72.54	-1.96
Dividend Payout Ratio %	0.00	2.83
Dividend per Basic Share	0.00	0.19
FCF Dividend Payout Ratio %	0.00	1.92
Interest Coverage	25.67	-126.58

Growth Metrics

Metric	Value	Industry
Capex Growth (1y) %	-796.49	-31.50
Cash and Equivalents Growth (1y) %	1.75	21.37
Dividend Growth (1y) %	0.00	0.24
EBIAT Growth (1y) %	-37.64	-55.24
EBITDA Growth (1y) %	37.72	-447.96
EBIT Growth (1y) %	12.37	-40.50
EBT Growth (1y) %	11.60	-70.94
EPS Growth (1y) %	-36.84	-70.02
FCF Growth (1y) %	-23.82	56.33
Gross Profit Growth (1y) %	6.03	185.11

Liquidity Ratios

Metric	Value	Industry
Asset Utilization Ratio	1.27	0.56
Cash Payout Ratio	0.00	0.01
Cash Ratio	0.51	1.21
Current Ratio	2.07	2.64
Debt to Equity Ratio	0.34	-0.80
Interest Cover Ratio	25.67	-126.58
Times Interest Earned	25.67	-126.58

Profitability

Metric	Value	Industry
EBITDA Margin %	-1.30	-129.91
EBIT Margin %	-2.33	-156.71
EBT Margin %	-2.24	-162.23
Gross Margin %	49.20	47.70
Net Profit Margin %	-3.30	-189.30

Star Equity Holdings, Inc. (NASDAQ: STRR)