Telos Corp (NASDAQ: TLS)

Sector: Technology Industry: Software - Infrastructure CIK: 0000320121
Market Cap 381.46 Mn
P/B 3.19
P/E -12.90
P/S 2.64
ROIC (Qtr) -24.72
Div Yield % 0.00
Rev 1y % (Qtr) 116.31
Total Debt (Qtr) 8.60 Mn
Debt/Equity (Qtr) 0.07

About

Telos Corporation, also known as TLS, is a Maryland-based company operating in the security industry. It specializes in providing software-based security solutions to empower and protect organizations, catering to the needs of government agencies, commercial businesses, and international customers. The company generates revenue through two reportable segments: Security Solutions and Secure Networks. The Security Solutions segment focuses on cybersecurity, cloud, identity solutions, and secure messaging. Telos offers a range of solutions in this...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 11.68M provides robust 1.36x coverage of total debt 8.60M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 59.05M provide 26.61x coverage of short-term debt 2.22M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 115.11M provides 13.39x coverage of total debt 8.60M, indicating robust asset backing and low credit risk.
  • Operating cash flow of 11.68M provides exceptional 20.28x coverage of interest expenses 576000, showing strong debt service capability.
  • Tangible assets of 115.11M provide exceptional 8.38x coverage of deferred revenue 13.73M, showing strong service capability backing.

Bear case

  • Operating cash flow of 11.68M barely covers its investment activities of (11.48M), with a coverage ratio of -1.02, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (11.48M) provide weak support for R&D spending of 6.39M, which is -1.80x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating cash flow of 11.68M provides insufficient coverage of deferred revenue obligations of 13.73M, which is 0.85x, raising concerns about future service delivery capabilities.
  • High receivables of 20.42M relative to inventory of 3.38M (6.05 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • The company's operating cash flow of 11.68M shows concerning coverage of stock compensation expenses of 31.59M, with a 0.37 ratio indicating potential earnings quality issues.

Concentration Risk Benchmark Breakdown of Revenue (2024)

Product and Service Breakdown of Revenue (2024)

Peer comparison

Companies in the Software - Infrastructure
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 MSFT Microsoft Corp 3,563.59 Bn 33.97 12.13 60.56 Bn
2 ORCL Oracle Corp 561.87 Bn 36.43 9.21 124.39 Bn
3 PLTR Palantir Technologies Inc. 413.65 Bn 377.64 106.17 0.24 Bn
4 PANW Palo Alto Networks Inc 126.45 Bn 113.19 13.23 0.35 Bn
5 CRWD CrowdStrike Holdings, Inc. 116.42 Bn -370.56 25.50 0.82 Bn
6 SNPS Synopsys Inc 86.06 Bn 64.60 12.20 14.29 Bn
7 NET Cloudflare, Inc. 62.78 Bn -609.27 31.18 3.50 Bn
8 FTNT Fortinet, Inc. 60.83 Bn 32.47 9.28 1.00 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.03 2.69
EV to Cash from Ops. EV/CFO 28.55 28.91
EV to Debt EV to Debt 38.80 19.83
EV to EBIT EV/EBIT -11.52 -9.95
EV to EBITDA EV/EBITDA -16.05 6.82
EV to Free Cash Flow [EV/FCF] EV/FCF 1,611.55 26.09
EV to Market Cap EV to Market Cap 0.87 0.36
EV to Revenue EV/Rev 2.31 -9.34
Price to Book Value [P/B] P/B 3.19 3.88
Price to Earnings [P/E] P/E -12.90 -10.66
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 -0.30
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 2.71
Dividend per Basic Share Div per Share (Qtr) 0.00 0.10
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 1.68
Interest Coverage Int. cover (Qtr) -50.26 -14.20
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 9.29 -408.01
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -15.36 226.39
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 -0.28
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 41.44 25.27
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 50.30 47.48
EBIT Growth (1y) % EBIT 1y % (Qtr) 41.49 20.13
EBT Growth (1y) % EBT 1y % (Qtr) 41.12 14.16
EPS Growth (1y) % EPS 1y % (Qtr) 41.43 67.50
FCF Growth (1y) % FCF 1y % (Qtr) 100.90 296.60
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 45.86 46.75
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.88 0.67
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.01
Cash Ratio Cash Ratio (Qtr) 1.58 1.22
Current Ratio Curr Ratio (Qtr) 2.76 2.59
Debt to Equity Ratio Debt/Equity (Qtr) 0.07 -0.96
Interest Cover Ratio Int Coverage (Qtr) -50.26 -14.20
Times Interest Earned Times Interest Earned (Qtr) -50.26 -14.20
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) -12.80 -548.16
EBIT Margin % EBIT Margin % (Qtr) -20.05 -199.84
EBT Margin % EBT Margin % (Qtr) -20.45 -607.20
Gross Margin % Gross Margin % (Qtr) 38.30 51.88
Net Profit Margin % Net Margin % (Qtr) -20.50 -610.00