Information Services Group (III) AI Stock Analysis

• Market Cap: $218.36M
• Dividend Yield: 3.97%
• Average Volume (3M): 211.70K
• Price to Earnings (P/E): 29.5
• Beta (1Y): 0.68
• Revenue Growth: -12.26%
• EPS Growth: N/A
• Country: US
• Employees: 1,300
• Sector: Technology
• Sector Strength: 91
• Industry: Information Technology Services
• EPS (TTM): 0.03
• Shares Outstanding: 48,204,170
• 10 Day Avg. Volume: 185,080
• 30 Day Avg. Volume: 211,697
• PEG Ratio: 0.40
• Price to Book (P/B): 2.21
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 28.69
• Enterprise Value/Market Cap: 1.27
• Enterprise Value/Revenue: 0.27
• Enterprise Value/Gross Profit: 2.78
• Enterprise Value/Ebitda: 4.69
• 1Y Price Target: $5.83
• Price Target Upside: 28.70% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3

• Rating: 58 Neutral
• Price Target: $4.50 ▼(-0.66%Downside)

The stock score of 58.25 reflects a company with strong cash flow and debt management but facing challenges in revenue growth and technical momentum. Positive earnings call guidance and strategic focus on AI provide some optimism, though valuation concerns persist.

Positive Factors

Earnings

Earnings beat forecasts due to adjusted EBITDA margin overage, lower-than-expected interest expenses, and a lower-than-expected non-GAAP tax rate.

Financial Performance

Adjusted EBITDA exceeded forecasts, coming in 7% higher than the FactSet consensus forecast.

Market Strategy

The company's acquisition strategy is focused on accelerating revenue penetration and expanding into existing channels.

Negative Factors

Business Activity

Total organic revenue declined 16% on a year-over-year basis, indicating a decrease in overall business activity.

Revenue

Total organic revenue declined 16% on a year-over-year basis, indicating a decrease in overall business activity.

Information Services Group Business Overview & Revenue Model

Company Description

Information Services Group (III) is a leading global technology research and advisory firm. Specializing in digital transformation services, the company provides a comprehensive range of solutions, including research, consulting, and managed services, tailored to optimize performance and enhance business outcomes for their clients. Operating across multiple sectors, ISG serves a diverse clientele globally, focusing on services such as automation, cloud, data analytics, and sourcing advisory.

How the Company Makes Money

Information Services Group generates revenue primarily through its advisory services, which include consulting and managed services. The company provides strategic guidance and actionable insights to organizations undergoing digital transformation, charging fees for its expert analysis and recommendations. Key revenue streams include client engagements for technology research, digital transformation consulting, and managed services contracts. Additionally, ISG hosts events and conferences, which contribute to its earnings by facilitating networking opportunities and knowledge sharing among industry leaders. Strategic partnerships with technology vendors and service providers also enhance its service offerings and drive additional revenue.

Information Services Group Financial Statement Overview

Summary

Information Services Group exhibits mixed financial performance. While debt management is commendable with a low debt-to-equity ratio, profitability metrics like net profit margin are declining, and revenue growth is negative at -16.4%. Cash flow remains stable, which is a positive aspect.

Income Statement

The company's gross profit margin for TTM is approximately 41%, indicating efficient cost management. However, the net profit margin has decreased to around 3.2%, reflecting increased operating expenses. Revenue growth is negative compared to the previous year, showing a decline of about 16.4%, which is concerning. The EBIT and EBITDA margins exhibit a slight improvement over the past year, but they remain moderate for the industry.

Balance Sheet

The debt-to-equity ratio has significantly improved to approximately 0.03, showing reduced leverage and enhanced financial stability. Return on equity for TTM stands at around 8.1%, indicating reasonable profitability. The equity ratio is about 46.9%, suggesting a balanced capital structure, but the declining trend in total assets may pose a risk.

Cash Flow

The free cash flow growth rate for TTM is approximately -2.0%, indicating slight contraction but overall stability. The operating cash flow to net income ratio is approximately 2.4, suggesting strong cash generation relative to net income. The free cash flow to net income ratio is about 2.2, further emphasizing robust cash flow management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	242.90M	247.59M	291.05M	286.27M	277.83M	249.13M
Gross Profit	99.71M	97.28M	112.14M	116.62M	109.36M	99.25M
EBITDA	22.13M	16.95M	21.21M	35.05M	30.60M	18.57M
Net Income	7.72M	2.84M	6.15M	19.73M	15.53M	2.75M
Balance Sheet
Total Assets	202.37M	204.51M	247.34M	243.03M	236.79M	239.52M
Cash, Cash Equivalents and Short-Term Investments	20.12M	23.07M	22.64M	30.59M	47.52M	43.73M
Total Debt	3.19M	64.92M	87.05M	85.97M	79.79M	84.73M
Total Liabilities	107.33M	108.23M	145.26M	142.60M	138.40M	140.38M
Stockholders Equity	95.04M	96.29M	102.08M	100.43M	98.39M	99.14M
Cash Flow
Free Cash Flow	16.70M	17.04M	8.84M	7.72M	39.62M	42.79M
Operating Cash Flow	18.51M	19.86M	12.27M	11.15M	41.94M	43.97M
Investing Cash Flow	19.18M	18.99M	-4.43M	-6.87M	-2.32M	-3.50M
Financing Cash Flow	-31.66M	-37.91M	-16.20M	-18.94M	-34.13M	-15.70M

Information Services Group Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 4.53
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For III, the sentiment is Neutral. The current price of 4.53 is below the 20-day moving average (MA) of 4.81, below the 50-day MA of 4.76, and above the 200-day MA of 3.70, indicating a neutral trend. The MACD of -0.04 indicates Positive momentum. The RSI at 41.81 is Neutral, neither overbought nor oversold. The STOCH value of 19.02 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for III.

Information Services Group Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TSSI	76 Outperform	$724.34M	81.55	137.01%	―	262.87%	873.76%
III	58 Neutral	$218.36M	29.47	8.09%	3.97%	-12.26%	―
Sector *	57 Neutral	HK$14.36B	5.83	-5.77%	4.76%	9.65%	-43.80%
PSFE	56 Neutral	$815.83M	39.11	-0.04%	―	3.50%	95.90%
UIS	55 Neutral	$309.14M	―	192.24%	―	-1.72%	82.15%
TTEC	54 Neutral	$251.60M	―	-73.85%	1.14%	-9.86%	-2426.25%
TLS	50 Neutral	$208.70M	―	-38.32%	―	-21.83%	-67.07%

Information Services Group Corporate Events

Information Services Group Extends CEO Contract to 2029

Information Services Group, Inc. has extended the employment agreement of its Chairman and CEO, Michael P. Connors, until December 31, 2029. As part of this extension, Connors receives restricted stock units and a potential cash bonus linked to performance targets, which reflects the company’s commitment to retaining leadership and aligning executive incentives with corporate performance goals.