VerifyMe, Inc. (NASDAQ: VRME)

Sector: Industrials Industry: Security & Protection Services CIK: 0001104038
Market Cap 12.79 Mn
P/B 1.15
P/E -2.71
P/S 0.59
ROIC (Qtr) -34.42
Div Yield % 0.00
Rev 1y % (Qtr) -7.40
Total Debt (Qtr) 833,000.00
Debt/Equity (Qtr) 0.08
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About

Investment thesis

Bull case

  • Strong operating cash flow of 1.12M provides robust 1.34x coverage of total debt 833000, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 4.01M provide 5x coverage of short-term debt 801000, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 8.02M provides 9.63x coverage of total debt 833000, indicating robust asset backing and low credit risk.
  • Short-term investments of 1.99M provide solid 5.71x coverage of other current liabilities 348000, indicating strong liquidity.
  • Tangible assets of 8.02M provide robust 23.05x coverage of other current liabilities 348000, indicating strong asset backing.

Bear case

  • Operating cash flow of 1.12M barely covers its investment activities of (2.79M), with a coverage ratio of -0.40, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (2.79M) provide weak support for R&D spending of 20000, which is -139.40x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 4.01M provide limited coverage of acquisition spending of (52000), which is -77.06x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • High receivables of 1.51M relative to inventory of 32000 (47.12 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • Operating earnings of (4.82M) show weak coverage of depreciation charges of 1.16M, with a -4.15 ratio indicating high capital intensity and potential reinvestment needs.

Peer comparison

Companies in the Security & Protection Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 ALLE Allegion plc 14.00 Bn 21.75 3.44 1.98 Bn
2 MSA MSA Safety Inc 7.99 Bn 374.33 5.71 0.63 Bn
3 BCO Brinks Co 6.24 Bn 112.89 1.74 4.32 Bn
4 BRC Brady Corp 4.99 Bn 38.51 4.29 0.18 Bn
5 ADT ADT Inc. 4.95 Bn -9.23 1.68 7.81 Bn
6 CXW CoreCivic, Inc. 2.04 Bn 18.69 0.98 1.04 Bn
7 GEO Geo Group Inc 2.02 Bn 8.48 0.80 1.63 Bn
8 NSSC Napco Security Technologies, Inc 1.57 Bn 33.18 8.19 0.01 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.57 1.53
EV to Cash from Ops. EV/CFO 6.77 15.25
EV to Debt EV to Debt 9.09 44.60
EV to EBIT EV/EBIT -1.57 8.47
EV to EBITDA EV/EBITDA -2.15 14.35
EV to Free Cash Flow [EV/FCF] EV/FCF 19.81 28.03
EV to Market Cap EV to Market Cap 0.59 0.95
EV to Revenue EV/Rev 0.35 2.53
Price to Book Value [P/B] P/B 1.15 3.48
Price to Earnings [P/E] P/E -2.71 32.21
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 106.48
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 25.28
Dividend per Basic Share Div per Share (Qtr) 0.00 0.36
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 7.91
Interest Coverage Int. cover (Qtr) 48.19 -11.72
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -57.26 -7.19
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 53.52 23.04
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 -3.73
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -51.64 35.26
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -26.76 87.34
EBIT Growth (1y) % EBIT 1y % (Qtr) -51.64 29.11
EBT Growth (1y) % EBT 1y % (Qtr) -42.10 41.98
EPS Growth (1y) % EPS 1y % (Qtr) -22.58 37.27
FCF Growth (1y) % FCF 1y % (Qtr) -43.57 -41.16
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -16.97 7.42
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.63 0.71
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.05
Cash Ratio Cash Ratio (Qtr) 1.88 1.61
Current Ratio Curr Ratio (Qtr) 3.70 3.37
Debt to Equity Ratio Debt/Equity (Qtr) 0.08 1.13
Interest Cover Ratio Int Coverage (Qtr) 48.19 -11.72
Times Interest Earned Times Interest Earned (Qtr) 48.19 -11.72
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) -16.90 -5.57
EBIT Margin % EBIT Margin % (Qtr) -22.24 -15.45
EBT Margin % EBT Margin % (Qtr) -21.78 -14.45
Gross Margin % Gross Margin % (Qtr) 34.90 38.13
Net Profit Margin % Net Margin % (Qtr) -21.80 -16.17