Long-established in the Software industry, Pros Holdings Inc (PRO, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 11.19%, juxtaposed with a three-month change of 26.76%. However, fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Pros Holdings Inc.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 3/10
- Profitability rank: 3/10
- Growth rank: 3/10
- GF Value rank: 5/10
- Momentum rank: 6/10
Based on the above method, GuruFocus assigned Pros Holdings Inc the GF Score of 62 out of 100, which signals poor future outperformance potential.
Pros Holdings Inc: A Snapshot
Pros Holdings Inc. is a provider of cloud-based revenue and profit realization software solutions to business-to-business and business-to-consumer companies. Its solutions assist customers in growing revenue, modernizing business processes, and supporting profitability by leveraging prescriptive analytics and data science-based decision-making technology. The company's solutions enable buyers to move fluidly across its customers' direct sales, partner, online, mobile, and emerging channels with personalized experiences. The firm generates revenue in the United States, Europe, Africa, Asia-Pacific, and Middle East regions.
Financial Strength Analysis
Pros Holdings Inc's financial strength indicators present some concerning insights about the company's balance sheet health. The company's interest coverage ratio of 0, which positions it worse than 0% of 1585 companies in the Software industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. It's worth noting that the esteemed investor Benjamin Graham typically favored companies with an interest coverage ratio of at least five.
The company's Altman Z-Scoreis just -0.03, which is below the distress zone of 1.81. This suggests that the company may face financial distress over the next few years. Additionally, the company's low cash-to-debt ratio at 0.57 indicates a struggle in handling existing debt levels.
Profitability Analysis
Pros Holdings Inc's low Profitability rank can also raise warning signals. Pros Holdings Inc's Operating Margin has declined over the past five years ((-27,882.00%)), as shown by the following data: 2018: -24.93; 2019: -21.11; 2020: -26.18; 2021: -28.62; 2022: -27.72. Additionally, Pros Holdings Inc's Gross Margin has also declined over the past five years, as evidenced by the data: 2018: 60.83; 2019: 60.41; 2020: 58.55; 2021: 58.27; 2022: 60.14. This trend underscores the company's struggles to convert its revenue into profits.
Growth Prospects
A lack of significant growth is another area where Pros Holdings Inc seems to falter, as evidenced by the company's low Growth rank. The company's revenue has declined by -0.7 per year over the past three years, which underperforms worse than 71.29% of 2414 companies in the Software industry. Stagnating revenues may pose concerns in a fast-evolving market. Lastly, Pros Holdings Inc predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Conclusion
Given the company's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. While Pros Holdings Inc has a commendable history, its current financial indicators suggest that it may struggle to maintain its performance in the future. Therefore, investors should exercise caution and conduct thorough research before making investment decisions.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
