Litigation Capital Management (LIT) AI Stock Analysis

• Market Cap: £10.40M
• Dividend Yield: N/A
• Average Volume (3M): 2.73M
• Price to Earnings (P/E): ―
• Beta (1Y): -0.05
• Revenue Growth: -44.60%
• EPS Growth: -658.40%
• Country: UK
• Employees: 6
• Sector: Financial
• Sector Strength: 70
• Industry: Financial - Credit Services
• EPS (TTM): -0.31
• Shares Outstanding: 114,281,296
• 10 Day Avg. Volume: 1,163,821
• 30 Day Avg. Volume: 2,729,150
• PEG Ratio: <0.01
• Price to Book (P/B): 1.10
• Price to Sales (P/S): -0.37
• P/FCF Ratio: -0.75
• 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: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 44 Neutral
• Price Target: 9.00p ▼(-5.56% Downside)

The overall stock score is primarily impacted by the company's weak financial performance, characterized by declining revenues, profitability issues, and increased leverage. Technical analysis also indicates a bearish trend, with the stock trading below key moving averages and weak momentum indicators. The valuation is unattractive due to a negative P/E ratio and no dividend yield.

Positive Factors

Business Model Strength

LIT's business model allows it to profit from high-stakes litigation without bearing upfront costs, providing a scalable revenue stream.

Diversified Portfolio

A diversified portfolio across multiple jurisdictions reduces risk and increases the likelihood of successful case outcomes, supporting revenue stability.

Partnerships with Law Firms

Strong partnerships with law firms provide LIT with a steady pipeline of cases, ensuring consistent business opportunities and revenue growth.

Negative Factors

Declining Revenue

Significant revenue decline indicates operational challenges and may affect LIT's ability to fund new cases, impacting future growth.

Increased Leverage

Rising debt levels can strain financial flexibility and increase risk, potentially limiting LIT's ability to invest in new opportunities.

Negative Cash Flow

Negative cash flow indicates inefficiencies in operations and could hinder LIT's ability to fund ongoing and future litigation cases.

Litigation Capital Management Business Overview & Revenue Model

Company Description

Litigation Capital Management (LIT) is a leading global provider of litigation financing solutions, specializing in funding legal proceedings across various sectors, including commercial litigation, arbitration, and class actions. The company focuses on offering capital to claimants and law firms to cover litigation costs, thus enabling access to justice while managing the financial risks associated with prolonged legal disputes. LIT operates in multiple jurisdictions, leveraging its expertise in litigation finance to support clients in achieving favorable legal outcomes.

How the Company Makes Money

Litigation Capital Management generates revenue primarily through its investment in legal cases, where it provides funding in exchange for a share of the proceeds from successful claims. When a funded case is resolved, either through a settlement or a court judgment, LIT receives a predetermined percentage of the monetary award or settlement amount. This model allows the company to profit from high-stakes litigation without bearing the upfront costs of legal expenses. Additionally, LIT may earn fees for due diligence and case assessment, providing further revenue streams. The company's partnerships with law firms and access to a diversified portfolio of funded cases enhance its earning potential, as successful outcomes in multiple jurisdictions contribute to overall profitability.

Litigation Capital Management Financial Statement Overview

Summary

Litigation Capital Management is facing financial difficulties, with declining revenues and profitability, increased leverage, and inconsistent cash flow performance. The company needs to address its operational inefficiencies and manage its debt levels to improve financial stability and shareholder value.

Income Statement

The company has experienced significant volatility in its revenue and profitability. The most recent year shows a dramatic decline in revenue by 59.55%, and gross profit is negative, indicating operational challenges. Historical data shows fluctuating revenue growth rates and profit margins, with a notable decline in the latest period. The negative EBIT and EBITDA margins in the latest year further highlight profitability issues.

Balance Sheet

The balance sheet reflects a moderate debt-to-equity ratio, but the recent increase in total debt is concerning. The equity ratio has been relatively stable, but the return on equity has decreased significantly, indicating reduced profitability for shareholders. The company's leverage has increased over time, posing potential risks.

Cash Flow

The cash flow situation is challenging, with negative operating and free cash flows in the latest period. Although there was a significant increase in free cash flow growth, the overall cash flow to net income ratios indicate inefficiencies in converting income into cash. Historical data shows inconsistent cash flow performance, raising concerns about liquidity.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	-176.02M	-163.12M	12.44M	184.74M	103.85M	37.06M
Gross Profit	-190.20M	-180.65M	-47.69M	65.44M	59.84M	26.62M
EBITDA	-47.21M	-47.21M	25.21M	168.03M	89.97M	15.76M
Net Income	-68.74M	-36.50M	12.71M	31.48M	34.61M	8.86M
Balance Sheet
Total Assets	213.08M	445.56M	591.80M	548.90M	407.06M	199.61M
Cash, Cash Equivalents and Short-Term Investments	8.82M	8.82M	533.33M	495.87M	346.94M	49.74M
Total Debt	37.18M	37.18M	61.92M	68.98M	211.59M	113.29M
Total Liabilities	331.19M	331.19M	402.86M	365.44M	258.13M	110.72M
Stockholders Equity	54.70M	54.70M	188.94M	183.47M	148.93M	88.87M
Cash Flow
Free Cash Flow	-64.41M	-80.46M	19.16M	84.50M	-55.26M	-56.56M
Operating Cash Flow	-64.41M	-43.51M	19.20M	84.59M	-55.22M	-56.54M
Investing Cash Flow	-99.07K	-103.63K	-31.00K	-198.00K	-335.00K	-70.00K
Financing Cash Flow	16.21M	18.17M	-55.58M	-32.61M	51.86M	74.14M

Litigation Capital Management Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 9.53
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:LIT, the sentiment is Negative. The current price of 9.53 is below the 20-day moving average (MA) of 10.25, below the 50-day MA of 9.78, and below the 200-day MA of 32.35, indicating a bearish trend. The MACD of -0.35 indicates Positive momentum. The RSI at 37.05 is Neutral, neither overbought nor oversold. The STOCH value of 13.06 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GB:LIT.

Litigation Capital Management Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ORCH	75 Outperform	£12.81M	4.18	15.17%	3.33%	8.91%	94.32%
DFCH	72 Outperform	£82.05M	6.13	12.34%	―	17.35%	91.55%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
LEND	48 Neutral	£2.29M	3.08	―	―	30.78%	―
LIT	44 Neutral	£10.40M	-0.26	-46.42%	―	-44.60%	-658.40%

Litigation Capital Management Corporate Events

Litigation Capital Management Announces Change in Major Holdings

Litigation Capital Management Limited has announced a change in its major holdings, with Perpetual Limited crossing a significant voting rights threshold. This adjustment in voting rights, now at 2.888%, reflects a slight decrease from the previous position and may impact the company’s governance and decision-making processes.

Litigation Capital Management Faces Judgment Setback and Pauses Fund III Marketing

Litigation Capital Management (LCM) announced a High Court judgment against its funded party in a commercial litigation case, impacting its financials with a recorded investment value of £5.0m. The company is reviewing the judgment and potential next steps. Additionally, LCM provided a trading update, noting modest realisations in the second half of the financial year and a significant increase in net debt to A$73m. The company has paused active marketing of Fund III due to uncertainties in the US litigation finance market and political developments, with plans to resume in late 2025 or early 2026. LCM remains confident in its dispute finance sector fundamentals and its differentiated model despite recent trial losses.

Litigation Capital Management Responds to Media Speculation on Dubai Investigation

Litigation Capital Management (LCM) has addressed recent media speculation regarding a potential investigation by a Dubai legal authority. The company clarified that it has not been contacted by any legal authority concerning the allegations and believes the claims lack merit. LCM is conducting its own investigation and will provide updates as necessary. This announcement underscores LCM’s commitment to transparency and may reassure stakeholders about its operational integrity amidst the speculation.