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DLH Holdings Corp. (DLHC)
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DLH Holdings (DLHC) AI Stock Analysis

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DLH Holdings

(NASDAQ:DLHC)

Rating:67Neutral
Price Target:
$6.00
▲(9.09%Upside)
DLH Holdings' overall score reflects a stable operational base with positive technical indicators and fair valuation. However, financial challenges and mixed earnings call sentiment, particularly revenue decline and high leverage, temper the outlook. Future growth potential exists but hinges on overcoming current hurdles.

DLH Holdings (DLHC) vs. SPDR S&P 500 ETF (SPY)

DLH Holdings Business Overview & Revenue Model

Company DescriptionDLH 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 healthcare, technology, and logistics solutions to the VA, Defense Health Agency, Tele-medicine and Advanced Technology Research Center, Navy Bureau of Medicine and Surgery, and the Army Medical Research and Material Command. It also provides a range of human services and solutions, which consists of monitoring and evaluation, electronic medical records migration, data collection and management, and nutritional and social health assessments; and IT system architecture design, migration plan, and ongoing maintenance services. In addition, the company offers public health and life sciences services, such as clinical trials, epidemiology studies, and disease prevention; and health promotion to underserved and at-risk communities through development of strategic communication campaigns, research on emerging trends, health informatics analyses, and application of best practices. It primarily serves the federal health services market. The company was formerly known as TeamStaff, Inc. and changed its name to DLH Holdings Corp. in June 2012. DLH Holdings Corp. was incorporated in 1969 and is headquartered in Atlanta, Georgia.
How the Company Makes MoneyDLH Holdings makes money through government contracts, providing a range of services including healthcare delivery solutions, public health research, and logistics and technical services. The company's revenue model is primarily based on long-term contracts with federal agencies such as the Department of Defense, Department of Health and Human Services, and other civilian agencies. These contracts often involve fixed-price, cost-plus, or time-and-materials agreements, where DLH is paid based on the scope of work and performance metrics. Significant partnerships with other technology and service providers enhance their offerings and contribute to sustained earnings.

DLH Holdings Earnings Call Summary

Earnings Call Date:May 07, 2025
(Q2-2025)
|
% Change Since: 35.80%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a mixed sentiment. While the company demonstrated strong cash flow and debt reduction, as well as a robust pipeline for future growth, it faced significant challenges with revenue decline due to contract set-asides and delays in contract awards.
Q2-2025 Updates
Positive Updates
Strong Cash Flow and Debt Reduction
DLH generated strong operating cash of $14.5 million in the second quarter, leading to a reduction in debt by $15.3 million from the previous quarter. The company has made all mandatory debt payments through March 2026, a year ahead of schedule.
Advanced Capabilities and New Business Pipeline
DLH's technology-powered solutions remain in high demand, evidenced by a recent win to provide research and development services to the U.S. Army's Medical Research and Development Command. The company has a robust pipeline with more than $1 billion in contracts under review and $3.5 billion in opportunities.
Improved EBITDA Margins
EBITDA as a percent of revenue increased to 10.5% this year from 10.1% in fiscal 2024, despite a decline in overall revenue.
Negative Updates
Revenue Decline
Revenue for the second quarter was $89.2 million, down from $101 million in the prior year period, primarily due to the conversion of certain VA and DoD programs to small business set-aside contracts.
Contract Uncertainty and Set-Asides
The company faces ongoing challenges with contract conversions to small business set-asides, which have impacted revenue by approximately $11.8 million in the quarter.
Delays in Contract Awards
There are delays in contract awards due to administrative process changes and reduced resources, with some RFPs and awards slipping to later dates.
Company Guidance
During the DLH Fiscal 2025 Second Quarter Earnings Conference Call, the company provided guidance and updates on several key financial metrics. Revenue for the second quarter was reported at $89.2 million, reflecting a contraction primarily due to the conversion of certain programs to small business set-aside contracts, which accounted for an $11.8 million decrease in revenue. DLH generated $14.5 million in operating cash for the quarter, allowing them to reduce debt by $15.3 million, with total outstanding debt now at $151.7 million. The company achieved an EBITDA of $9.4 million, representing 10.5% of revenue, slightly higher than the previous year's 10.1%. DLH anticipates continued debt reduction and aims to utilize 50-55% of EBITDA for this purpose by the fiscal year's end. The company is actively engaged in bidding activities with more than $1 billion in contracts under review, positioning them well for fiscal 2026 and beyond, despite challenges in the government services industry and the macroeconomic environment.

DLH Holdings Financial Statement Overview

Summary
DLH Holdings shows stable operational footing with decent gross margins and effective cash flow management. However, challenges like declining revenue and high leverage might affect financial stability. The balance sheet reflects considerable reliance on debt, potentially impacting future growth prospects. Strengths in operational efficiency and cash flow are offset by the need to address leverage and improve profitability.
Income Statement
65
Positive
DLH Holdings has shown a mixed performance in its income statement. The gross profit margin for TTM is approximately 18.7%, and the net profit margin is around 1.44%, indicating that while gross margins are reasonable, net margins are relatively low. The TTM revenue has decreased compared to the previous annual figure, indicating a negative revenue growth rate. However, the EBIT and EBITDA margins are stable, standing at 6.07% and 10.18% respectively, which shows operational efficiency but also room for improvement in profitability.
Balance Sheet
58
Neutral
DLH Holdings faces challenges in its balance sheet. The debt-to-equity ratio is roughly 1.44, suggesting a high leverage, which could pose financial risks. The return on equity (ROE) for TTM is about 4.81%, which is modest. The equity ratio stands at approximately 36.80%, indicating that a significant portion of assets is financed through equity, but the company still relies considerably on debt.
Cash Flow
70
Positive
The cash flow statement shows some positive aspects. The TTM operating cash flow to net income ratio is robust at about 3.69, indicating strong cash generation relative to net income. The free cash flow to net income ratio is an impressive 3.52, showcasing effective cash management. However, the free cash flow growth rate is negative compared to the previous year, pointing to potential volatility in cash flow generation.
BreakdownTTMSep 2024Sep 2023Sep 2022Sep 2021Sep 2020
Income Statement
Total Revenue377.07M395.94M375.87M395.17M246.09M209.19M
Gross Profit70.38M78.91M79.86M72.29M51.48M45.59M
EBITDA38.40M40.15M32.65M40.94M25.34M21.39M
Net Income5.43M7.40M1.46M23.29M10.14M7.11M
Balance Sheet
Total Assets306.61M314.38M339.84M169.01M197.17M183.56M
Cash, Cash Equivalents and Short-Term Investments196.00K342.00K215.00K228.00K24.05M1.36M
Total Debt162.69M164.81M191.71M39.11M66.27M90.94M
Total Liabilities143.84M204.25M237.40M76.95M131.56M130.13M
Stockholders Equity112.85M110.13M102.44M92.06M65.61M53.44M
Cash Flow
Free Cash Flow19.11M26.53M30.41M371.00K45.56M19.30M
Operating Cash Flow20.03M27.37M31.03M1.24M45.66M19.45M
Investing Cash Flow-371.00K-836.00K-181.20M-872.00K-44.00K-32.83M
Financing Cash Flow-19.70M-26.40M150.15M-24.19M-22.93M12.95M

DLH Holdings Technical Analysis

Technical Analysis Sentiment
Negative
Last Price5.50
Price Trends
50DMA
5.20
Positive
100DMA
4.73
Positive
200DMA
6.39
Negative
Market Momentum
MACD
0.12
Positive
RSI
49.86
Neutral
STOCH
13.82
Positive
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 5.5 is below the 20-day moving average (MA) of 5.63, above the 50-day MA of 5.20, and below the 200-day MA of 6.39, indicating a neutral trend. The MACD of 0.12 indicates Positive momentum. The RSI at 49.86 is Neutral, neither overbought nor oversold. The STOCH value of 13.82 is Positive, 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

Overall Rating
UnderperformOutperform
Sector (65)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
67
Neutral
$81.28M14.694.94%-6.34%75.05%
65
Neutral
$10.90B15.415.26%1.89%3.11%-26.85%
56
Neutral
$362.57M7.73-2.09%65.22%-133.47%
56
Neutral
$282.42M-19.25%5.39%-7.00%71.30%
54
Neutral
$40.11M
-2.44%
54
Neutral
$602.61M13.766.47%-4.32%-22.48%
43
Neutral
$80.75M-9999.00%-1.00%26.86%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
DLHC
DLH Holdings
5.50
-6.16
-52.83%
ACTG
Acacia Research
3.66
-1.91
-34.29%
OMEX
Odyssey Marine Exploration
1.74
-3.62
-67.54%
QUAD
Quad/Graphics
5.47
-0.49
-8.22%
TISI
Team
17.65
7.19
68.74%
KODK
Kodak
6.61
0.88
15.36%

DLH Holdings Corporate Events

Shareholder MeetingsBusiness Operations and Strategy
DLH Holdings Approves New 2025 Equity Incentive Plan
Neutral
Mar 18, 2025

On March 13, 2025, DLH Holdings Corp. shareholders approved the 2025 Equity Incentive Plan at the Annual Meeting, replacing the 2016 Omnibus Equity Incentive Plan. This new plan, effective immediately, signifies a strategic shift in the company’s approach to equity incentives, potentially impacting its market positioning and stakeholder interests.

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.Date of analysis: Jul 16, 2025