Grafenia (SFT) AI Stock Analysis

• Market Cap: £88.55M
• Dividend Yield: N/A
• Average Volume (3M): 274.78K
• Price to Earnings (P/E): 238.3
• Beta (1Y): 0.16
• Revenue Growth: 13.05%
• EPS Growth: 94.59%
• Country: UK
• Employees: 131
• Sector: Industrials
• Sector Strength: 72
• Industry: Specialty Business Services
• EPS (TTM): >-0.01
• Shares Outstanding: 390,083,300
• 10 Day Avg. Volume: 351,846
• 30 Day Avg. Volume: 274,778
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• 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: £29.00
• Price Target Upside: 27.19% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 0

• Rating: 52 Neutral
• Price Target: 29.00p ▲(27.19% Upside)

Grafenia's overall stock score is primarily influenced by its financial performance and valuation. While there are positive trends in revenue growth and operational improvements, the company faces significant challenges with profitability and cash flow management. The technical analysis suggests a lack of strong momentum, and the valuation is unattractive due to a negative P/E ratio. These factors collectively result in a moderate stock score.

Grafenia Business Overview & Revenue Model

Company Description

Software Circle plc, together with its subsidiaries, engages in the licensing of various software in the United Kingdom, Ireland, Europe, and internationally. Its brands and solutions include Link Maker, an adoption management software; Be the Brand, a marketing and digital asset management software; Arc technology, an education placement management software; and Nettl systems, a business software that includes a collection of online print platforms and software solutions for business owners to run their graphics. The company also offers Watermark, an online document management system; VERTICAL+, an ecommerce storefront; Topfloor systems provide software services for property management businesses; and CareDocs, a digital care planning and management software. The company was formerly known as Grafenia Plc and changed its name to Software Circle plc in October 2023. Software Circle plc was incorporated in 2000 and is based in Manchester, the United Kingdom.

How the Company Makes Money

Grafenia generates revenue through multiple streams, primarily by offering subscription-based software services for digital marketing and design. The company charges businesses for access to its online platforms that facilitate graphic design and marketing campaigns. Additionally, Grafenia earns revenue from direct sales of printed materials, catering to the needs of its clients for promotional and branding purposes. Strategic partnerships with other businesses in the marketing and technology sectors further enhance its revenue opportunities, allowing for cross-promotion and access to new customer bases.

Grafenia Financial Statement Overview

Summary

Grafenia is showing signs of recovery with improved revenue growth and operational margins. However, profitability remains a concern with negative net income. The balance sheet shows improved leverage, but returns on equity are still negative. Cash flow management needs attention, as indicated by the decline in free cash flow growth. Overall, while there are positive trends, the company needs to address profitability and cash flow challenges to strengthen its financial position.

Income Statement

Grafenia has shown a positive revenue growth rate of 8.55% in the latest year, indicating a recovery trend. The gross profit margin improved to 72.49%, reflecting strong cost management. However, the net profit margin remains negative at -1.80%, indicating ongoing profitability challenges. The EBIT and EBITDA margins have improved significantly, suggesting operational improvements, but the company is still not profitable at the net level.

Balance Sheet

The debt-to-equity ratio has improved to 0.50, indicating better leverage management compared to previous years. However, the return on equity remains negative at -1.54%, reflecting continued challenges in generating shareholder returns. The equity ratio stands at 56.15%, indicating a solid equity base relative to total assets.

Cash Flow

Operating cash flow is positive, with a ratio of 0.45 to net income, indicating some cash generation capability. However, free cash flow growth is negative at -47.58%, highlighting potential cash flow management issues. The free cash flow to net income ratio of 0.53 suggests that while cash flow is improving, it is not yet robust.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	18.27M	18.27M	16.16M	11.68M	8.92M	6.94M
Gross Profit	1.20M	13.25M	10.19M	5.75M	3.54M	-559.00K
EBITDA	4.88M	4.82M	1.36M	-265.00K	172.00K	251.00K
Net Income	-329.00K	-329.00K	-2.37M	-1.41M	-1.15M	-2.08M
Balance Sheet
Total Assets	38.10M	38.10M	34.39M	23.62M	11.76M	13.58M
Cash, Cash Equivalents and Short-Term Investments	8.57M	8.57M	15.39M	1.99M	1.46M	2.74M
Total Debt	10.80M	10.80M	9.13M	18.72M	0.00	7.08M
Total Liabilities	16.70M	16.70M	12.71M	22.69M	9.27M	9.33M
Stockholders Equity	21.39M	21.39M	21.68M	928.00K	2.49M	4.25M
Cash Flow
Free Cash Flow	2.30M	1.57M	1.42M	-142.00K	-438.00K	-507.00K
Operating Cash Flow	2.36M	2.94M	2.63M	308.00K	134.00K	212.00K
Investing Cash Flow	-8.30M	-7.97M	-5.28M	-8.72M	-575.00K	-842.00K
Financing Cash Flow	-877.00K	-1.79M	16.05M	8.94M	-708.00K	2.27M

Grafenia Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 22.80
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:SFT, the sentiment is Negative. The current price of 22.8 is below the 20-day moving average (MA) of 23.21, below the 50-day MA of 25.57, and below the 200-day MA of 27.43, indicating a bearish trend. The MACD of -0.83 indicates Negative momentum. The RSI at 33.37 is Neutral, neither overbought nor oversold. The STOCH value of 33.33 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GB:SFT.

Grafenia Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
INSE	77 Outperform	―	―	―	―	-5.03%	―
KEYS	73 Outperform	£207.75M	21.34	56.75%	5.66%	16.29%	22.80%
KGH	68 Neutral	£163.90M	21.63	7.40%	2.53%	8.01%	-23.02%
BEG	64 Neutral	£177.96M	28.16	7.85%	3.86%	12.41%	331.52%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
PPHC	63 Neutral	£273.97M	―	-40.39%	2.40%	15.27%	-73.02%
SFT	52 Neutral	£88.55M	238.33	-1.53%	―	13.05%	94.59%