DLH Holdings (DLHC) AI Stock Analysis

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DLH Holdings

(NASDAQ:DLHC)

63Neutral

DLH Holdings scores a 63, reflecting a stable but challenging financial environment. The company's strengths lie in its cost management and cash flow efficiency, but it faces hurdles with its modest net profit margins and leverage. Technical analysis indicates a bearish trend, while the valuation suggests potential undervaluation. The earnings call highlighted both growth opportunities and risks, balancing the score slightly above average.

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

Market Cap

$51.36M

Dividend YieldN/A

Average Volume (3M)78.92K

Price to Earnings (P/E)8.2

Beta (1Y)1.00

Revenue Growth-3.02%

EPS Growth201.62%

CountryUS

Employees2,800

SectorIndustrials

Sector Strength75

IndustrySpecialty Business Services

Share Statistics

EPS (TTM)0.43

Shares Outstanding14,386,468

10 Day Avg. Volume145,729

30 Day Avg. Volume78,915

Financial Highlights & Ratios

PEG Ratio0.04

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap5.74

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit3.74

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$15.00

Price Target Upside306.50% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering1

DLH Holdings Business Overview & Revenue Model

Company DescriptionDLH Holdings Corp (DLHC) is a public sector-focused company that provides healthcare and social services to government agencies. With a strong emphasis on delivering technology-enabled solutions, DLHC offers services such as medical logistics, public health research, and program management. The company primarily serves federal government clients, including the Department of Health and Human Services, Department of Veterans Affairs, and Department of Defense.

How the Company Makes MoneyDLH Holdings makes money by securing contracts with various U.S. government agencies, primarily within the healthcare and public health sectors. The company's revenue streams are largely derived from long-term service contracts and task orders that encompass a range of services, including health IT solutions, logistics and readiness support, and professional services. Key factors contributing to DLHC's earnings include its ability to maintain strong relationships with government clients, its expertise in navigating federal procurement processes, and its focus on specialized services that align with government priorities. Additionally, DLHC may engage in strategic partnerships and acquisitions to expand its service offerings and enhance its competitive position in the market.

DLH Holdings Financial Statement Overview

Summary

DLH Holdings presents a stable financial outlook with strengths in cost management and cash flow efficiency. The income statement reflects stable revenue and profitability margins, while the balance sheet highlights moderate leverage and asset management. Cash flow analysis confirms effective liquidity management. However, areas for improvement include enhancing net profit margins and optimizing capital structure to maximize shareholder returns.

Income Statement

Positive

DLH Holdings demonstrates moderate financial performance with a consistent revenue stream. The TTM (Trailing-Twelve-Months) gross profit margin stands at 36.6%, indicating efficient cost management. However, the net profit margin of 1.6% suggests potential challenges in translating revenue into profit. The EBIT and EBITDA margins are commendable at 6.1% and 10.4%, respectively. Revenue growth is relatively flat, indicating stability but limited expansion.

Balance Sheet

Neutral

The balance sheet reveals a balanced financial position with a debt-to-equity ratio of 1.6, reflecting moderate leverage. The equity ratio is 34.3%, suggesting a decent level of asset financing through equity, though improvements can be made. Return on equity (ROE) is low at 5.7%, showing limited profitability relative to shareholder equity. Overall, the balance sheet is stable but could benefit from optimized capital structure.

Cash Flow

Positive

DLH Holdings shows robust cash flow management with a strong operating cash flow to net income ratio of 1.69, indicating effective cash conversion. Free cash flow to net income ratio is 1.59, further highlighting efficient cash usage. Despite a decline in operating cash flow compared to the previous year, the company maintains positive free cash flow growth, showcasing solid liquidity management.

Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Breakdown
Income Statement		Total Revenue
395.94M	375.87M	395.17M	246.09M	209.19M
	Gross Profit
78.91M	79.86M	72.29M	51.48M	45.59M
	EBIT
24.90M	17.09M	33.28M	17.22M	13.46M
	EBITDA
40.15M	32.65M	40.94M	25.34M	21.39M
	Net Income Common Stockholders
7.40M	1.46M	23.29M	10.14M	7.11M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
342.00K	215.00K	228.00K	24.05M	1.36M
	Total Assets
314.38M	339.84M	169.01M	197.17M	183.56M
	Total Debt
164.81M	191.71M	39.11M	66.27M	90.94M
	Net Debt
164.47M	191.49M	38.88M	42.22M	89.58M
	Total Liabilities
204.25M	237.40M	76.95M	131.56M	130.13M
	Stockholders Equity
110.13M	102.44M	92.06M	65.61M	53.44M
Cash Flow		Free Cash Flow
27.37M	30.41M	371.00K	45.56M	19.30M
	Operating Cash Flow
27.37M	31.03M	1.24M	45.66M	19.45M
	Investing Cash Flow
-836.00K	-181.20M	-872.00K	-44.00K	-32.83M
	Financing Cash Flow
-26.40M	150.15M	-24.19M	-22.93M	12.95M

DLH Holdings Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price3.69

Price Trends

50DMA

4.41

Negative

100DMA

6.03

Negative

200DMA

7.88

Negative

Market Momentum

MACD

-0.28

Negative

RSI

43.82

Neutral

STOCH

77.49

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DLHC, the sentiment is Neutral. The current price of 3.69 is above the 20-day moving average (MA) of 3.51, below the 50-day MA of 4.41, and below the 200-day MA of 7.88, indicating a neutral trend. The MACD of -0.28 indicates Negative momentum. The RSI at 43.82 is Neutral, neither overbought nor oversold. The STOCH value of 77.49 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DLHC	63 Neutral	$51.36M	8.21	5.88%	―	-3.02%	201.62%
Sector *	63 Neutral	$4.30B	11.36	5.41%	214.65%	4.15%	-9.13%
KODK	57 Neutral	$497.52M	6.84	10.20%	―	-6.62%	37.82%
TISI	55 Neutral	$96.92M	―	-161.69%	―	-1.20%	50.12%
ACTG	47 Neutral	$295.94M	7.73	-6.66%	―	-2.23%	-180.29%
QUAD	44 Neutral	$256.84M	―	-60.09%	4.33%	-9.65%	6.43%
OMEX	43 Neutral	$38.49M	―		―	-4.37%	―

* Industrials Sector Average

Performance Comparison

DLHC

DLH Holdings

3.57

-7.05

-66.38%

ACTG

Acacia Research

3.08

-1.79

-36.76%

OMEX

Odyssey Marine Exploration

1.45

-2.22

-60.49%

QUAD

Quad/Graphics

5.18

0.87

20.19%

TISI

Team

21.57

14.45

202.95%

KODK

Kodak

6.23

1.73

38.44%

DLH Holdings Earnings Call Summary

Earnings Call Date:Feb 05, 2025

(Q1-2025)

% Change Since: -48.89%|

Next Earnings Date:May 07, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed outlook. While there were significant achievements such as new contracts and a strong business pipeline, there were also notable challenges including revenue decline, debt increase, and cash flow issues due to small business set-asides and timing of services.

Q1-2025 Updates

Positive Updates

C6ISR and Advanced IT Services Award

DLH was awarded a contract to provide C6ISR and advanced IT services to the Navy, which expands their information warfare systems engineering portfolio.

Strong EBITDA Margin

Reported EBITDA of $9.9 million representing an EBITDA margin of 11% on revenue.

OASIS IDIQ Contract Win

DLH won the OASIS IDIQ contract, enabling them to prime new opportunities and replace gaps left by previous contracts.

Pipeline of New Business Opportunities

DLH has a pipeline of qualified new business opportunities valued at approximately $4 billion.

Negative Updates

Revenue Decline

First quarter revenue decreased to $90.8 million from $97.9 million in the prior year period.

Impact of Small Business Set-Aside Conversions

Revenue contraction due to small business set-aside conversions within the DoD portfolio was around $5 million in the quarter.

Increased Debt

Total debt increased to $167 million from $154.6 million at the start of the fiscal year.

Operating Cash Use

Approximately $11.5 million of operating cash was used during the quarter versus cash generation of $5.1 million in the prior year.

Company Guidance

During the DLH Holdings Corp. Fiscal 2025 First Quarter Earnings Conference Call, the company reported revenue of $90.8 million and an EBITDA of $9.9 million, resulting in an EBITDA margin of 11%. The guidance highlighted a strategic focus on enhancing technology utilization and organic growth, despite challenges like small business set-aside contract conversions impacting revenue. The company's pipeline of qualified new business opportunities stands at approximately $4 billion, indicating strong future potential. DLH remains committed to leveraging its digital transformation and systems engineering capabilities to offset revenue losses from contract unbundling while maintaining financial flexibility with a total debt reduction strategy, aiming to use 50-55% of EBITDA for debt repayment. The management expressed confidence in the company's ability to adapt to industry changes and emphasized a positive outlook on the impact of the new administration on DLH's business landscape.

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

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.