Litigation Capital Management (LIT) AI Stock Analysis

• Market Cap: £29.71M
• Dividend Yield: 4.63%
• Average Volume (3M): 302.72K
• Price to Earnings (P/E): 10.0
• Beta (1Y): 0.88
• Revenue Growth: -60.87%
• EPS Growth: -106.15%
• Country: UK
• Employees: 6
• Sector: Financial
• Sector Strength: 81
• Industry: Financial - Credit Services
• EPS (TTM): -0.01
• Shares Outstanding: 114,281,296
• 10 Day Avg. Volume: 676,744
• 30 Day Avg. Volume: 302,718
• PEG Ratio: -0.58
• Price to Book (P/B): 0.91
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 1.98
• 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: 574.07% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 0

• Rating: 46 Neutral
• Price Target: 27.00p ▲(0.00%Upside)

Litigation Capital Management Limited faces several challenges, including significant revenue decline, bearish technical signals, and recent legal setbacks. The negative P/E ratio and high net debt following adverse corporate events further weigh on the stock. The dividend yield provides some support, but overall, the outlook remains cautious.

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 makes money by providing capital to fund legal cases in exchange for a share of the proceeds if the case is successful. This revenue model involves assessing the potential outcomes of legal disputes and investing in those with a high likelihood of success. Key revenue streams include fees charged for funding services and the portion of settlements or awards from successful cases. Significant factors contributing to LIT's earnings include its expertise in legal risk assessment and strong relationships with law firms and legal professionals.

Litigation Capital Management Financial Statement Overview

Summary

Litigation Capital Management Limited demonstrates resilience with strong margins and a stable balance sheet. However, the significant revenue decline poses a challenge to growth prospects. The company effectively manages its debt, but improving revenue is critical 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	12.44M	184.74M	103.85M	37.06M	38.44M
Gross Profit	-47.69M	65.44M	59.84M	26.62M	21.72M
EBITDA	25.21M	168.03M	89.97M	15.76M	10.36M
Net Income	12.71M	31.48M	34.61M	8.86M	5.25M
Balance Sheet
Total Assets	591.80M	548.90M	407.06M	199.61M	110.83M
Cash, Cash Equivalents and Short-Term Investments	533.33M	495.87M	346.94M	49.74M	31.75M
Total Debt	61.92M	312.97M	211.59M	113.29M	12.60M
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: Negative
• Last Price: 27.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

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 27 is below the 20-day moving average (MA) of 36.22, below the 50-day MA of 44.03, and below the 200-day MA of 78.86, indicating a bearish trend. The MACD of -5.51 indicates Positive momentum. The RSI at 30.88 is Neutral, neither overbought nor oversold. The STOCH value of 27.84 is Neutral, 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
DFCH	76 Outperform	£64.67M	5.20	13.00%	―	26.02%	340.22%
Sector *	72 Outperform	S$32.10B	14.03	11.69%	6.39%	8.28%	16.42%
ORCH	69 Neutral	£13.45M	5.83	11.96%	1.59%	17.87%	52.54%
LIT	46 Neutral	£29.71M	10.02	-1.54%	4.63%	-60.87%	-106.15%
BANK		£23.63M	―	-147.16%	―	―	―
LEND		£2.86M	―	-1088.89%	―	―	―
ASAI		£150.00M	6.55	32.74%	1.48%	―	―

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.