DLH Holdings (DLHC)
NASDAQ:DLHC
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DLH Holdings
(NASDAQ:DLHC)
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Rating:53Neutral
Price Target:
$6.00
▲(4.17% Upside)
Action:ReiteratedDate:02/10/26
The score is driven primarily by pressured financial performance—declining revenue, compressed margins, and elevated leverage—partly offset by solid cash generation. Technical signals are broadly neutral, while valuation is a meaningful headwind due to the high P/E. The latest earnings call adds modest support from improving visibility, cost actions, and a deleveraging plan, but near-term revenue and EBITDA declines remain significant.
Positive Factors
Strong cash generation
DLH's trailing twelve-month operating cash flow (~$30M) and free cash flow (~$31.1M) with strong FCF growth (+30.8%) demonstrate durable cash conversion. Reliable cash generation supports working capital, funds capex and debt reduction, and provides flexibility during revenue volatility, underpinning execution of strategic initiatives.
Negative Factors
Revenue decline and margin compression
Sustained revenue declines and significantly compressed gross margins materially weaken DLH's earnings power. Lower top-line volumes and margin erosion reduce free earnings available for deleveraging or reinvestment, increasing sensitivity to contract timing and making margin recovery necessary to restore durable profitability.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong cash generation
DLH's trailing twelve-month operating cash flow (~$30M) and free cash flow (~$31.1M) with strong FCF growth (+30.8%) demonstrate durable cash conversion. Reliable cash generation supports working capital, funds capex and debt reduction, and provides flexibility during revenue volatility, underpinning execution of strategic initiatives.
Read all positive factors
DLH Holdings (DLHC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$81.74M
Dividend YieldN/A
Average Volume (3M)27.65K
Price to Earnings (P/E)―
Beta (1Y)1.19
Revenue Growth-12.99%
EPS Growth-81.86%
CountryUS
Employees2,400
SectorIndustrials
Sector Strength72
IndustrySpecialty Business Services
Share Statistics
EPS (TTM)-0.09
Shares Outstanding14,493,035
10 Day Avg. Volume37,306
30 Day Avg. Volume27,646
Financial Highlights & Ratios
PEG Ratio-0.73
Price to Book (P/B)0.72
Price to Sales (P/S)0.24
P/FCF Ratio3.54
Enterprise Value/Market Cap2.83
Enterprise Value/Revenue0.72
Enterprise Value/Gross Profit3.84
Enterprise Value/Ebitda8.22
Forecast
1Y Price Target
$10.00Price Target Upside73.61% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
EPS Forecast (FY)-0.35
Revenue Forecast (FY)$234.89M
DLH Holdings Business Overview & Revenue Model
Company Description
DLH Holdings Corp. provides technology-enabled business process outsourcing, program management solutions, and public health research and analytics services in the United States. The company offers defense and veterans' health solutions, including...
How the Company Makes Money
DLH Holdings generates revenue primarily through government contracts and service agreements. Key revenue streams include providing healthcare services, logistics support, and technology solutions tailored to the needs of federal agencies. The com...
DLH Holdings Earnings Call Summary
Earnings Call Date:Feb 09, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:May 06, 2026
Earnings Call Sentiment Neutral
The call conveyed a mixed but constructive outlook. Short-term financial results show meaningful year-over-year revenue and EBITDA declines (revenue down ~24.1%, adjusted EBITDA down ~34.3%) driven primarily by program transitions to small-business set-asides and limited bid activity. Offsetting factors include improved budget clarity for fiscal 2026, sequential margin improvement to 9.5%, significant year-over-year free cash flow improvement (reduction in cash usage of ~$7.3M), active indirect cost reductions, and a clear deleveraging plan (targeting conversion of ~50%–55% of FY2026 EBITDA to debt reduction). Management emphasized market positioning in modernization, cybersecurity and AI, and expects more stable procurement activity going forward. On balance, positives (improved visibility, cost actions, cash improvement and debt-reduction plan) temper but do not fully offset the sizable near-term revenue and profitability headwinds.Positive Updates
Improved Budget Clarity and Funding for Fiscal 2026
Congress enacted a fiscal 2026 budget that increased funding capacity and provided improved visibility for clients; key federal health agencies received funding increases versus fiscal 2025, which management expects to support organic growth and modernization-driven awards.
Negative Updates
Material Revenue Decline Year-Over-Year
Revenue for the quarter was $68.9 million versus $90.8 million in the prior-year period, a decline of $21.9 million (≈-24.1%). Management attributed approximately $18 million of the decline to conversions of programs (primarily CMOP and Head Start) to small business set-aside contracts.
Read all updates
Q1-2026 Updates
Positive
Negative
Improved Budget Clarity and Funding for Fiscal 2026
Congress enacted a fiscal 2026 budget that increased funding capacity and provided improved visibility for clients; key federal health agencies received funding increases versus fiscal 2025, which management expects to support organic growth and modernization-driven awards.
Read all positive updates
Company Guidance
DLH said Q1 (ended Dec. 31, 2025) results and guidance reflected a transition year: revenue was $68.9M (down from $90.8M a year ago) with adjusted EBITDA of $6.5M (vs. $9.9M) and adjusted EBITDA margin improving sequentially to 9.5%; free cash flow used was about $4.8M (vs. $12.1M LY); debt increased modestly to $136.6M but the company remains ahead of mandatory term repayments and in compliance with covenants and expects to convert roughly 50–55% of fiscal 2026 EBITDA to reduce debt by year‑end; management attributed about $18M of the revenue decline to CMOP and Head Start small‑business set‑aside conversions (plus roughly $4M of other smaller impacts), expects CMOP transitions to be in a wind‑down phase with completion/ramp‑down into Q3, and said ongoing cost‑scaling actions will continue into Q2 with more benefit expected then—while noting recently enacted FY‑26 budget increases vs. FY‑25 improve visibility and should support organic growth and modernization opportunities.DLH Holdings Financial Statement Overview
Summary
Income Statement
44
Neutral
Balance Sheet
52
Neutral
Cash Flow
67
Positive
| Breakdown | TTM | Sep 2025 | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 322.61M | 344.50M | 395.94M | 375.87M | 395.17M | 246.09M |
| Gross Profit | 60.26M | 65.16M | 77.49M | 79.86M | 72.29M | 51.48M |
| EBITDA | 28.13M | 32.29M | 40.15M | 30.54M | 40.30M | 24.55M |
| Net Income | -1.08M | 1.36M | 7.40M | 1.46M | 23.29M | 10.14M |
Balance Sheet | ||||||
| Total Assets | 283.51M | 290.66M | 314.38M | 339.84M | 169.01M | 197.17M |
| Cash, Cash Equivalents and Short-Term Investments | 257.00K | 125.00K | 342.00K | 215.00K | 228.00K | 24.05M |
| Total Debt | 149.80M | 144.97M | 164.81M | 191.71M | 39.11M | 66.27M |
| Total Liabilities | 171.32M | 177.71M | 204.25M | 237.40M | 76.95M | 131.56M |
| Stockholders Equity | 112.19M | 112.96M | 110.13M | 102.44M | 92.06M | 65.61M |
Cash Flow | ||||||
| Free Cash Flow | 30.26M | 22.98M | 26.53M | 30.41M | 371.00K | 45.56M |
| Operating Cash Flow | 29.98M | 23.22M | 27.37M | 31.03M | 1.24M | 45.66M |
| Investing Cash Flow | 272.00K | -241.00K | -836.00K | -181.20M | -872.00K | -44.00K |
| Financing Cash Flow | -30.45M | -23.19M | -26.40M | 150.15M | -24.19M | -22.93M |
DLH Holdings Technical Analysis
Negative
5.76
Price Trends
5.80
Negative
5.82
Negative
5.74
Negative
Market Momentum
-0.02
Positive
46.03
Neutral
32.00
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DLHC, the sentiment is Negative. The current price of 5.76 is below the 20-day moving average (MA) of 5.80, below the 50-day MA of 5.80, and above the 200-day MA of 5.74, indicating a bearish trend. The MACD of -0.02 indicates Positive momentum. The RSI at 46.03 is Neutral, neither overbought nor oversold. The STOCH value of 32.00 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DLHC.
DLH Holdings Risk Analysis
DLH Holdings disclosed 44 risk factors in its most recent earnings report. DLH Holdings 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 0 New Risks
DLH Holdings Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
53 Neutral | $81.74M | -15.35 | -0.95% | ― | -12.99% | -81.86% | |
51 Neutral | $74.08M | -1.29 | -1862.25% | ― | 3.73% | 3.56% | |
47 Neutral | $35.33M | -0.47 | -131.65% | ― | -20.49% | 25.95% | |
46 Neutral | $26.93M | -17.27 | -12.54% | ― | 2.52% | 45.76% | |
44 Neutral | $12.88M | -0.76 | -95.31% | ― | -35.72% | -277.39% | |
41 Neutral | $50.64M | >-0.01 | 269.38% | ― | -41.55% | -249.30% |
* Industrials Sector Average
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.