Heritage Global (HGBL) AI Stock Analysis

• Market Cap: $44.47M
• Dividend Yield: N/A
• Average Volume (3M): 111.66K
• Price to Earnings (P/E): 14.8
• Beta (1Y): 0.10
• Revenue Growth: 0.02%
• EPS Growth: -68.55%
• Country: US
• Employees: 86
• Sector: Financial
• Sector Strength: 70
• Industry: Financial - Capital Markets
• EPS (TTM): 0.02
• Shares Outstanding: 34,741,554
• 10 Day Avg. Volume: 122,391
• 30 Day Avg. Volume: 111,657
• PEG Ratio: -0.22
• Price to Book (P/B): 1.05
• Price to Sales (P/S): 1.51
• P/FCF Ratio: 9.00
• Enterprise Value/Market Cap: 0.89
• Enterprise Value/Revenue: 0.80
• Enterprise Value/Gross Profit: 3.49
• Enterprise Value/Ebitda: 3.78
• 1Y Price Target: $3.67
• Price Target Upside: 186.72% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 3
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 61 Neutral
• Price Target: $1.50 ▲(17.19% Upside)

Heritage Global's overall stock score reflects a mixed financial performance with strong balance sheet but declining profitability and cash flow challenges. Technical indicators are neutral to slightly bearish, and while the valuation is reasonable, the lack of dividend yield is a drawback. The earnings call provided some positive insights but also highlighted ongoing challenges.

Positive Factors

Strong Balance Sheet

A strong balance sheet with increased equity and cash reserves provides financial stability and flexibility for future investments and growth.

Industrial Assets Division Growth

Growth in the Industrial Assets division indicates robust demand and effective operations, contributing positively to overall revenue and market position.

M&A Strategy Advancement

Strategic M&A activities can enhance market presence and drive long-term growth, potentially increasing shareholder value through synergies and expanded capabilities.

Negative Factors

Declining Profitability

Reduced net income reflects challenges in maintaining profitability, which could impact future earnings and investor confidence if not addressed.

Cash Flow Challenges

Negative cash flows suggest inefficiencies in cash generation, potentially constraining operational flexibility and investment capacity.

Economic Uncertainty Impact

Economic uncertainty affecting large transactions can limit revenue opportunities, necessitating reliance on smaller deals, which may not fully offset the impact.

Heritage Global Business Overview & Revenue Model

Company Description

Heritage Global, Inc., together with its subsidiaries, operates as an asset services company with focus on financial and industrial asset transactions. The company provides market making, acquisitions, dispositions, valuations, and secured lending services. It focuses on identifying, valuing, acquiring, and monetizing underlying tangible and intangible assets. Heritage Global Inc. acts as an adviser, as well as a principal, acquiring, or brokering manufacturing facilities; surplus industrial machinery and equipment; industrial inventories; accounts receivable portfolios; intellectual property; and business enterprises. The company was formerly known as Counsel RB Capital Inc. and changed its name to Heritage Global, Inc. in August 2013. Heritage Global, Inc. was incorporated in 1983 and is headquartered in San Diego, California.

How the Company Makes Money

Heritage Global generates revenue primarily through its auction services, asset management, and advisory services. The company earns fees from conducting auctions, commissions on sales, and service fees for asset valuations. Key revenue streams include the sale of industrial equipment, real estate assets, and surplus inventory. Additionally, HGBL may engage in partnerships with financial institutions and other organizations to provide specialized asset management services, which further enhances its revenue opportunities. The company's ability to leverage technology in its auction processes and its extensive network of industry contacts also contribute to its financial success.

Heritage Global Financial Statement Overview

Summary

Heritage Global's financial performance is mixed. The income statement shows declining margins and profitability, with a strong gross profit margin but reduced net profit margin. The balance sheet is strong with low leverage, but cash flow challenges are evident with negative operating and free cash flows.

Income Statement

Heritage Global's income statement shows a mixed performance. The TTM gross profit margin of 65.18% is strong, but it has decreased from the previous year's 87.20%. The net profit margin has also declined to 6.18% from 11.42% in the previous year. Revenue growth is positive at 1.94% TTM, recovering from a decline in the previous year. However, EBIT and EBITDA margins have decreased significantly, indicating potential challenges in operational efficiency.

Balance Sheet

The balance sheet of Heritage Global is relatively strong with a low debt-to-equity ratio of 0.027, indicating low leverage and financial stability. The return on equity is moderate at 4.69% TTM, down from 7.95% the previous year, suggesting a decrease in profitability. The equity ratio remains healthy, reflecting a solid capital structure.

Cash Flow

Cash flow analysis reveals concerns, with negative operating cash flow and free cash flow in the TTM period. The free cash flow growth rate is significantly negative, indicating cash flow challenges. The operating cash flow to net income ratio is negative, suggesting inefficiencies in converting income to cash. However, the free cash flow to net income ratio remains relatively strong at 74.59%, indicating some resilience.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	49.89M	45.36M	60.55M	46.91M	25.79M	26.18M
Gross Profit	11.37M	14.21M	21.39M	10.39M	11.01M	10.33M
EBITDA	10.51M	10.31M	14.83M	11.66M	3.47M	6.42M
Net Income	3.08M	5.18M	12.47M	15.49M	3.05M	9.66M
Balance Sheet
Total Assets	86.51M	81.31M	83.17M	67.56M	50.46M	44.55M
Cash, Cash Equivalents and Short-Term Investments	19.43M	21.75M	12.28M	12.67M	13.62M	23.39M
Total Debt	1.80M	2.71M	9.88M	7.15M	6.58M	1.00M
Total Liabilities	20.01M	16.11M	22.09M	19.26M	17.82M	14.61M
Stockholders Equity	66.50M	65.20M	61.08M	48.30M	32.64M	29.94M
Cash Flow
Free Cash Flow	-8.82M	7.61M	12.76M	6.27M	-4.06M	9.14M
Operating Cash Flow	-952.00K	7.75M	13.02M	6.48M	-2.63M	9.15M
Investing Cash Flow	-6.93M	10.87M	-15.87M	-7.52M	-10.20M	4.51M
Financing Cash Flow	743.00K	-9.15M	2.46M	78.00K	3.06M	7.00M

Heritage Global Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 1.28
• 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 HGBL, the sentiment is Neutral. The current price of 1.28 is above the 20-day moving average (MA) of 1.28, below the 50-day MA of 1.31, and below the 200-day MA of 1.82, indicating a neutral trend. The MACD of -0.02 indicates Negative momentum. The RSI at 49.11 is Neutral, neither overbought nor oversold. The STOCH value of 42.86 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for HGBL.

Heritage Global Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
WHG	74 Outperform	$163.33M	21.43	5.99%	3.32%	4.03%	151.19%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
HGBL	61 Neutral	$44.47M	14.83	4.65%	―	0.02%	-68.55%
DOMH	61 Neutral	$71.42M	0.81	-29.28%	―	―	―
GREE	46 Neutral	$25.28M	-7.31	―	―	-3.52%	83.39%
ARBK	40 Underperform	$7.73M	-0.02	―	―	-13.86%	-32.19%