VirnetX Holding Corp (NASDAQ: VHC)

Sector: Technology Industry: Software - Infrastructure CIK: 0001082324
Market Cap 73.23 Mn
P/B 2.50
P/E -4.10
P/S 725.10
ROIC (Qtr) -60.23
Div Yield % 0.00
Rev 1y % (Qtr) 2,800.00
Total Debt (Qtr) 0.00
Debt/Equity (Qtr) 0.00

About

Price action

Investment thesis

Bull case

  • Short-term investments of 11.06M provide solid 6.53x coverage of other current liabilities 1.70M, indicating strong liquidity.
  • Tangible assets of 37.98M provide robust 22.41x coverage of other current liabilities 1.70M, indicating strong asset backing.
  • Strong cash position of 17.13M provides 10.11x coverage of other current liabilities 1.70M, indicating excellent liquidity.
  • Cash reserves of 17.13M provide robust 8.27x coverage of current liabilities 2.07M, indicating strong short-term solvency.
  • Cash reserves of 17.13M provide solid 2.59x coverage of other non-current liabilities 6.62M, indicating strong liquidity.

Bear case

  • Operating cash flow of (15.35M) barely covers its investment activities of 7.48M, with a coverage ratio of -2.05, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of 7.48M provide weak support for R&D spending of 5.99M, which is 1.25x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • The company's operating cash flow of (15.35M) shows concerning coverage of stock compensation expenses of 1.85M, with a -8.30 ratio indicating potential earnings quality issues.
  • Free cash flow of (15.37M) provides weak coverage of capital expenditures of 28000, with a -549.07 ratio suggesting additional external financing needs for growth initiatives.
  • Operating earnings of (17.86M) show weak coverage of depreciation charges of 21000, with a -850.52 ratio indicating high capital intensity and potential reinvestment needs.

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 1.47 2.69
EV to Cash from Ops. EV/CFO -3.65 28.91
EV to Debt EV to Debt 0.00 19.83
EV to EBIT EV/EBIT -3.13 -9.95
EV to EBITDA EV/EBITDA -2.98 6.82
EV to Free Cash Flow [EV/FCF] EV/FCF -3.64 26.09
EV to Market Cap EV to Market Cap 0.76 0.36
EV to Revenue EV/Rev 553.88 -9.34
Price to Book Value [P/B] P/B 2.50 3.88
Price to Earnings [P/E] P/E -4.10 -10.66
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 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 Interest Coverage 0.00 -14.20
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 63.16 -408.01
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -31.84 226.39
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 -0.28
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 6.31 25.27
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 12.59 47.48
EBIT Growth (1y) % EBIT 1y % (Qtr) 6.31 20.13
EBT Growth (1y) % EBT 1y % (Qtr) 6.31 14.16
EPS Growth (1y) % EPS 1y % (Qtr) 7.88 67.50
FCF Growth (1y) % FCF 1y % (Qtr) 9.08 296.60
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 2,625.00 46.75
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.00 0.67
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.01
Cash Ratio Cash Ratio (Qtr) 8.27 1.22
Current Ratio Curr Ratio (Qtr) 13.72 2.59
Debt to Equity Ratio Debt/Equity (Qtr) 0.00 -0.96
Interest Cover Ratio Interest Cover Ratio 0.00 -14.20
Times Interest Earned Times Interest Earned 0.00 -14.20
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) -17,663.40 -548.16
EBIT Margin % EBIT Margin % (Qtr) -17,684.16 -199.84
EBT Margin % EBT Margin % (Qtr) -17,684.16 -607.20
Gross Margin % Gross Margin % (Qtr) 100.00 51.88
Net Profit Margin % Net Margin % (Qtr) -17,686.10 -610.00