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Advantage Solutions (ADV)
NASDAQ:ADV

Advantage Solutions (ADV) AI Stock Analysis

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Advantage Solutions

(NASDAQ:ADV)

Rating:54Neutral
Price Target:
$1.50
▲( 33.93% Upside)
Advantage Solutions shows a challenging financial performance with declining revenues and profitability issues. Technical indicators suggest a bearish trend, while the valuation remains unattractive due to a negative P/E ratio. Despite some positive developments in tech infrastructure and labor management, macroeconomic challenges and a lowered financial outlook weigh heavily. The recent executive change adds a slight positive note, though it is not enough to offset broader concerns.
Positive Factors
Operational Optimization
ADV is optimizing its operating model for better margins.
Staffing Improvement
ADV is seeing improvement in staffing due to better recruiting efforts and centralized staffing.
Negative Factors
Labor Market Challenges
Staffing shortages have accelerated due to a historically tight labor market, creating additional challenges for ADV.
Macro Pressures
Macro pressures, labor headwinds, and declining sentiment have negatively impacted ADV's recent financial results.

Advantage Solutions (ADV) vs. SPDR S&P 500 ETF (SPY)

Advantage Solutions Business Overview & Revenue Model

Company DescriptionAdvantage Solutions Inc. provides outsourced solutions to consumer goods companies and retailers in North America and internationally. It operates in two segments, Sales and Marketing. The Sales segment offers brand-centric services, such as headquarter relationship management; analytics, insights, and intelligence; administration; and brand-centric merchandising services. This segment also provides retailer-centric services comprising retailer-centric merchandising, in-store media, and digital commerce. The Marketing segment offers brand-centric services, including shopper and consumer marketing, and brand experiential services; and retailer-centric services, such as retail experiential, private label, digital marketing, and digital media and advertising. The company was formerly known as Karman Holding Corp. and changed its name to Advantage Solutions Inc. in March 2016. Advantage Solutions Inc. was founded in 1987 and is headquartered in Irvine, California.
How the Company Makes MoneyAdvantage Solutions generates revenue primarily through service fees charged to its clients, which include CPG manufacturers and retailers. The company earns money by providing outsourced sales and marketing services, which help clients increase their market presence and drive sales. Key revenue streams include fees for retail merchandising, sales representation, marketing services, and digital commerce solutions. Additionally, Advantage Solutions may benefit from performance-based incentives tied to the achievement of specific sales targets or marketing objectives established in client agreements. Strategic partnerships with leading brands and retailers also play a significant role in sustaining and growing the company's revenue.

Advantage Solutions Financial Statement Overview

Summary
Advantage Solutions is encountering significant financial difficulties, with declining revenues and negative net income. The balance sheet shows reduced leverage risk, but negative returns on equity raise concerns. Cash flow management shows some resilience with positive free cash flow, but operating cash flow challenges persist.
Income Statement
35
Negative
Advantage Solutions has faced challenges with declining revenues and negative net income over recent years. Gross profit margin stands at 14.22%, indicating a decline in core profitability. The net profit margin is negative at -9.17%, reflecting consistent losses. Revenue decreased by approximately 15.61% from the previous period, highlighting a concerning downward trend. EBIT and EBITDA margins also suffered, with both being negative, suggesting operational inefficiencies.
Balance Sheet
45
Neutral
The company's debt-to-equity ratio has improved significantly, standing at 0.02, reflecting reduced leverage risk. However, the return on equity is negative at -43.66%, due to continued net losses, impacting shareholder returns. The equity ratio is 24.09%, suggesting a moderate level of financial stability, despite the declining asset base.
Cash Flow
50
Neutral
Free cash flow has decreased but remains positive at $85.26 million, showing some resilience. The operating cash flow to net income ratio is negative, indicating cash flow challenges in covering net losses. However, the company has managed to maintain positive free cash flow to net income ratio, suggesting some efficiency in cash management.
Breakdown
Dec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
3.57B4.22B4.05B3.60B3.16B
Gross Profit
507.27M564.38M556.56M638.17M604.19M
EBIT
-294.98M76.19M133.12M230.05M67.01M
EBITDA
-82.75M301.17M-1.14B469.13M277.84M
Net Income Common Stockholders
-326.96M-63.26M-1.38B54.49M-161.71M
Balance SheetCash, Cash Equivalents and Short-Term Investments
205.23M142.84M120.72M164.62M204.30M
Total Assets
3.11B3.78B4.26B5.85B5.78B
Total Debt
1.74B1.92B2.11B2.10B2.16B
Net Debt
1.53B1.79B1.99B1.94B1.96B
Total Liabilities
2.36B2.68B3.03B3.27B3.24B
Stockholders Equity
748.74M1.11B1.12B2.48B2.44B
Cash FlowFree Cash Flow
85.26M192.72M80.80M94.82M314.78M
Operating Cash Flow
93.09M239.00M121.26M125.99M345.73M
Investing Cash Flow
206.45M-55.22M-113.54M-75.84M-99.00M
Financing Cash Flow
-211.42M-181.34M-41.64M-86.30M-230.15M

Advantage Solutions Technical Analysis

Technical Analysis Sentiment
Negative
Last Price1.12
Price Trends
50DMA
1.35
Negative
100DMA
1.94
Negative
200DMA
2.69
Negative
Market Momentum
MACD
-0.07
Positive
RSI
39.14
Neutral
STOCH
24.42
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ADV, the sentiment is Negative. The current price of 1.12 is below the 20-day moving average (MA) of 1.26, below the 50-day MA of 1.35, and below the 200-day MA of 2.69, indicating a bearish trend. The MACD of -0.07 indicates Positive momentum. The RSI at 39.14 is Neutral, neither overbought nor oversold. The STOCH value of 24.42 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ADV.

Advantage Solutions Risk Analysis

Advantage Solutions disclosed 62 risk factors in its most recent earnings report. Advantage Solutions reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 2 New Risks
1.
We may face potential and actual harms and uncertainties arising from the matter related to our 2018 acquisition of the Take 5 Media Group (the "Take 5 Matter"), including litigation and governmental investigations. Q4, 2024
2.
Interruption of supply chains and tariffs, retaliations or other governmental restrictions could adversely affect our business and our profitability. Q4, 2024

Advantage Solutions Peers Comparison

Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
DLDLX
71
Outperform
$624.57M11.209.10%8.60%-2.69%61.73%
60
Neutral
$14.12B6.43-3.57%3.69%2.49%-35.43%
BOBOC
56
Neutral
$446.64M501.770.16%11.58%
ADADV
54
Neutral
$376.20M-42.89%-13.81%-433.86%
CCCCO
48
Neutral
$551.35M4.92%-17.54%66.05%
47
Neutral
$462.09M-4.73%0.61%42.01%-100.56%
31
Underperform
$7.13M-157.27%
* Communication Services Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
ADV
Advantage Solutions
1.12
-2.42
-68.36%
CCO
Clear Channel Outdoor
1.08
-0.36
-25.00%
DLX
Deluxe
13.64
-7.14
-34.36%
NCMI
National Cinemedia
4.90
-0.66
-11.87%
BOC
Boston Omaha
14.20
-0.93
-6.15%
VSME
VS Media Holdings Limited Class A
0.75
-1.63
-68.49%

Advantage Solutions Earnings Call Summary

Earnings Call Date:May 12, 2025
(Q1-2025)
|
% Change Since: -23.81%|
Next Earnings Date:Aug 12, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a mixed outlook for Advantage Solutions. While there are notable achievements in technology infrastructure progress and strong demand in Experiential Services, the company faces challenges with declining revenues, staffing issues, and a softened growth environment. The proactive measures to improve labor utilization and debt reduction are positive, but significant hurdles remain due to macroeconomic factors.
Q1-2025 Updates
Positive Updates
Strong Tech Infrastructure Progress
Advantage Solutions is making significant progress on modernizing its tech infrastructure, with Phase 2 of the ERP implementation rolled out internationally without notable disruption. The complete implementation of the data platform is on track for the second half of 2025.
Improved Labor Utilization Initiatives
New processes in talent acquisition have started to yield benefits, with better hiring rates and improved staffing and execution rates in Q2. The centralized labor model initiative is expected to cover the majority of part-time labor hours in the near to medium term.
Solid Demand in Experiential Services
Despite staffing challenges, demand for Experiential Services remains strong with a 3% year-over-year growth in events per day and execution rates of approximately 93%.
Debt Reduction and Cash Management
Advantage Solutions voluntarily repurchased $20 million of debt and $1 million of shares, ending the quarter with $121 million of cash and an untapped revolving credit facility of nearly $400 million.
Negative Updates
Revenue and EBITDA Decline
First quarter revenues of $696 million and adjusted EBITDA of $58 million were down 5% and 18%, respectively, from the prior year.
Consumer Spending Pullbacks
Decreased consumer confidence and tariff concerns led to lower-than-expected consumer purchases, resulting in some clients reevaluating their spending levels, impacting sales negatively.
Challenges in Staffing and Execution
Difficulties in staffing across Experiential and Retailer Services segments led to execution shortfalls, exacerbated by intentional turnover and attrition designed to upskill talent acquisition teams.
Lowered Revenue and EBITDA Outlook
The company has lowered its revenue and adjusted EBITDA outlook to flat to down low single digits due to a softer growth environment and macroeconomic challenges.
Company Guidance
During the Advantage Solutions First Quarter 2025 Earnings Call, the company reported a 5% decrease in revenues to $696 million and an 18% decline in adjusted EBITDA to $58 million compared to the previous year. The decline was attributed to intentional client exits, anticipated transformation-related investments, and a challenging macroeconomic environment marked by reduced consumer confidence and increased uncertainty due to tariff concerns. These factors led to lower-than-expected consumer purchases and a reduction in retailer inventories. The company also faced labor market challenges, impacting their Experiential and Retailer Services segments. Despite these hurdles, Advantage Solutions remains optimistic about future opportunities, notably in private label and supply chain services, and maintains a robust new business pipeline. Consequently, they adjusted their revenue and adjusted EBITDA guidance to flat to down low single digits for the year. The company also reiterated its adjusted unlevered cash flow guidance, projecting it to exceed 50% of adjusted EBITDA, while continuing to invest in tech infrastructure and talent acquisition to drive long-term performance.

Advantage Solutions Corporate Events

Executive/Board Changes
Advantage Solutions Appoints New Chief Accounting Officer
Positive
Mar 21, 2025

Advantage Solutions Inc. has appointed Daniel Gore as its new Chief Accounting Officer and principal accounting officer, effective March 24, 2025. Mr. Gore brings extensive financial leadership experience from his previous roles at 8th Avenue Food & Provisions and Benson Hill. His appointment replaces Christopher Growe, who will continue as the Chief Financial Officer. The move is expected to strengthen the company’s financial management capabilities.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.