Litigation Capital Management (LIT) AI Stock Analysis

• Market Cap: £65.48M
• Dividend Yield: 2.18%
• Average Volume (3M): 243.47K
• Price to Earnings (P/E): 10.0
• Beta (1Y): 0.65
• Revenue Growth: -60.87%
• EPS Growth: -106.15%
• Country: UK
• Employees: 6
• Sector: Financial
• Sector Strength: 87
• Industry: Financial - Credit Services
• EPS (TTM): -0.01
• Shares Outstanding: 114,281,296
• 10 Day Avg. Volume: 150,821
• 30 Day Avg. Volume: 243,470
• PEG Ratio: -0.16
• Price to Book (P/B): 0.77
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 7.85
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: £182.00
• Price Target Upside: 213.79% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1

Litigation Capital Management Limited's overall score is low due to a combination of significant revenue decline, bearish technical indicators, and negative corporate events. While the company maintains strong financial management, the negative P/E ratio and recent legal setbacks pose risks to its future performance. The stock's current valuation and oversold technical condition might attract some speculative interest, but the fundamental challenges remain.

Litigation Capital Management Business Overview & Revenue Model

Company Description

Litigation Capital Management Limited provides litigation finance and risk management services associated with individual and portfolios of litigation projects in Australia and the United Kingdom. Its services include commercial claims, class actions, insolvency, arbitration, and corporate portfolios. The company was founded in 1998 and is headquartered in Sydney, Australia.

How the Company Makes Money

Litigation Capital Management Limited makes money primarily by investing in legal claims and disputes and earning a return on these investments. The company provides funding to claimants in exchange for a portion of the proceeds from successful legal outcomes. This financing model allows LIT to share in the financial success of the cases it funds. Key revenue streams include returns from successful litigation investments, management fees, and interest on capital deployed. Additionally, LIT may enter into significant partnerships with legal firms and other financial entities to enhance its funding capabilities and expand its reach in the litigation finance sector.

Litigation Capital Management Financial Statement Overview

Summary

Litigation Capital Management Limited shows resilience in its financial management, with strong margins and a healthy balance sheet. However, the substantial revenue drop poses a challenge to growth prospects. The company appears to be managing its debt effectively, but sustained improvement in revenue is crucial for future performance.

Income Statement

The company experienced a significant decline in total revenue from 2023 to 2024, with a 46.2% drop. Gross and net profit margins remain relatively stable, but the reduced revenue impacts overall profitability. EBIT and EBITDA margins are strong, suggesting efficient cost management despite revenue challenges.

Balance Sheet

The balance sheet showcases a stable equity position with an equity ratio of approximately 31.9% in 2024. The debt-to-equity ratio improved to 0.33, indicating a reduction in leverage. ROE decreased due to lower net income, but the company maintains a solid cash position.

Cash Flow

Cash flow from operations is positive, but there is a noticeable decline from the previous year. Free cash flow remains positive, indicating the company can cover capital expenditures. The operating cash flow to net income ratio suggests efficient cash generation from operations despite revenue challenges.

Breakdown
Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement		Total Revenue
99.37M	184.74M	103.85M	37.06M	38.44M
	Gross Profit
39.24M	65.44M	59.84M	26.62M	21.72M
	EBIT
76.09M	169.70M	89.68M	15.41M	10.27M
	EBITDA
25.21M	168.03M	89.97M	15.76M	10.36M
	Net Income Common Stockholders
12.71M	31.48M	34.61M	8.86M	5.25M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
533.33M	495.87M	346.94M	49.74M	31.75M
	Total Assets
591.80M	548.90M	407.06M	199.61M	110.83M
	Total Debt
61.92M	312.97M	211.59M	113.29M	12.60M
	Net Debt
8.89M	208.51M	161.63M	63.56M	-19.15M
	Total Liabilities
402.86M	365.44M	258.13M	110.72M	29.81M
	Stockholders Equity
188.94M	183.47M	148.93M	88.87M	81.00M
Cash Flow		Free Cash Flow
19.16M	84.50M	-55.26M	-56.56M	-28.24M
	Operating Cash Flow
19.20M	84.59M	-55.22M	-56.54M	-28.19M
	Investing Cash Flow
-31.00K	-198.00K	-335.00K	-70.00K	-345.00K
	Financing Cash Flow
-55.58M	-32.61M	51.86M	74.14M	10.71M

Litigation Capital Management Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 58.00
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:LIT, the sentiment is Neutral. The current price of 58 is above the 20-day moving average (MA) of 50.04, above the 50-day MA of 56.64, and below the 200-day MA of 89.78, indicating a neutral trend. The MACD of -0.22 indicates Negative momentum. The RSI at 61.31 is Neutral, neither overbought nor oversold. The STOCH value of 95.43 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for GB:LIT.

Litigation Capital Management Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DFCH	76 Outperform	£61.45M	4.70	13.00%	―	26.02%	340.22%
Sector *	64 Neutral	$12.73B	9.82	7.91%	17015.08%	12.18%	-5.69%
ORCH	62 Neutral	£7.90M	3.43	11.96%	10.00%	17.87%	52.54%
LIT	47 Neutral	£65.48M	10.02	-1.54%	2.18%	-60.87%	-106.15%

Litigation Capital Management Corporate Events

Litigation Capital Management Faces Setback in Arbitration Case

Litigation Capital Management Limited announced an unsuccessful outcome in a commercial arbitration case it funded, as decided by the London Court of International Arbitration. Despite the setback, LCM’s CEO Patrick Moloney emphasized the company’s confidence in its broader portfolio, highlighting the inherent binary nature of legal finance outcomes. The investment, co-funded by Fund I, involved £2.5m of LCM’s capital and £7.5m from Fund I, and was previously valued at £17.0m. LCM maintains no exposure to adverse costs, and Fund I’s performance remains strong with a Net Realised IRR of 35%. The company continues to refine its valuation methodology to ensure disciplined investment assessments.

Litigation Capital Management Reports Volatile Interim Results Amid Strategic Transition

Litigation Capital Management Limited reported interim results for the half-year ending December 2024, highlighting a volatile period characterized by significant wins in arbitration cases and setbacks in class action trials. The company generated A$51 million in revenue from seven realizations, but faced a loss after tax of A$8.4 million due to negative fair value movements. Despite these challenges, LCM is progressing in its transition to a fund management model, with Fund III expected to launch by June 2025. The company is optimistic about a rebound in new commitments and is expanding into the US legal finance market while integrating AI technologies to enhance its operations.

Litigation Capital Management Files Appeal in Class Action Case

Litigation Capital Management Limited announced that an appeal has been filed in a class action case funded by LCM against Stanwell Corporation LTD and CS Energy LTD, following a first instance judgment that ruled against LCM’s funded party. This development may impact LCM’s operations and investor relations, with further engagement expected after the publication of interim results in March 2025.

Litigation Capital Management Files Appeal in Class Action Case

Litigation Capital Management Limited announced that an appeal has been filed in a class action case it funded against Stanwell Corporation LTD and CS Energy LTD on behalf of Queensland electricity users. The initial judgment was not in favor of LCM’s funded party, but the company is looking forward to further engagement with investors following the publication of its interim results in March 2025. This development could impact LCM’s operations and its position in the dispute financing industry, as the outcome of the appeal may influence stakeholder confidence and future investment strategies.

Litigation Capital Management Faces Unusual Judgment Outcome in Quintis Class Action

Litigation Capital Management Limited announced that the Federal Court of Australia delivered a judgment in a class action investment they funded on behalf of Quintis Limited shareholders. The court found misleading and deceptive conduct by Quintis’s former director and its auditors, but LCM’s funded party did not establish that this conduct caused them loss, leaving the case unsuccessful. LCM invested A$13.2 million and is now considering the merits of an appeal, highlighting an unusual judgment outcome and reaffirming its commitment to disciplined risk management and capital allocation.