Information Services Group (III) AI Stock Analysis

• Market Cap: $230.42M
• Dividend Yield: 3.81%
• Average Volume (3M): 213.23K
• Price to Earnings (P/E): 30.8
• Beta (1Y): 0.69
• Revenue Growth: -12.26%
• EPS Growth: N/A
• Country: US
• Employees: 1,300
• Sector: Technology
• Sector Strength: 78
• Industry: Information Technology Services
• EPS (TTM): 0.03
• Shares Outstanding: 48,204,170
• 10 Day Avg. Volume: 193,208
• 30 Day Avg. Volume: 213,227
• 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: 1.20
• Enterprise Value/Revenue: 0.27
• Enterprise Value/Gross Profit: 2.78
• Enterprise Value/Ebitda: 4.69
• 1Y Price Target: $5.83
• Price Target Upside: 23.26% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3

• Rating: 67 Neutral
• Price Target: $5.00 ▲(5.71%Upside)

The overall stock score reflects solid earnings call results, positive technical indicators, and stable cash flows. However, the negative revenue growth and high P/E ratio suggest caution. The company's strategic focus on AI and digital transformation is a promising aspect.

Positive Factors

Financial Performance

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

Market Position

Information Services Group is the market leader in the sourcing advisory industry, providing a competitive advantage with its proprietary data.

Negative Factors

Revenue Decline

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, Inc., together with its subsidiaries, operates as a technology research and advisory company in the Americas, Europe, and the Asia Pacific. The company offers digital transformation services, including automation, cloud, and data analytics; sourcing advisory; managed governance and risk; network carrier; technology strategy and operations design; change management; and market intelligence and technology research and analysis services. It supports private and public sector organizations to transform and optimize their operational environments. The company also provides ISG Digital, a client solution platform that helps clients developing technology, transformation, sourcing, and digital solutions; and ISG Enterprise, a client solution platform that helps clients manage change and optimize operations in areas comprising finance, human resource, and Procure2Pay. In addition, it offers ISG GovernX, a software platform, which provides insights from market and performance data, and automates the management of third-party supplier relationships that comprise contract and project lifecycles, and risk management. The company serves private sector clients operating in the manufacturing, banking and financial services, insurance, health sciences, energy and utilities, and consumer services industries; and public sector clients, including state and local governments, airport and transit authorities, and national and provincial government units. Information Services Group, Inc. was founded in 2006 and is based in Stamford, Connecticut.

How the Company Makes Money

Information Services Group makes money through a combination of consulting services, research subscriptions, and managed services. The company generates revenue by providing strategic advisory services that help clients navigate complex technology landscapes and implement effective digital strategies. Additionally, ISG sells research reports and benchmarking data that organizations use to make informed business decisions. The firm also earns income through managed services contracts, where it offers ongoing support and maintenance for clients' IT operations. Key partnerships with technology providers and industry alliances further enhance ISG's market presence and contribute to its revenue streams.

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
	EBIT
11.52M	5.76M	14.61M	29.48M	25.27M	9.27M
	EBITDA
22.13M	16.95M	21.21M	35.05M	30.60M	18.57M
	Net Income Common Stockholders
7.72M	2.84M	6.15M	19.73M	15.53M	2.75M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
20.12M	23.07M	22.64M	30.59M	47.52M	43.73M
	Total Assets
202.37M	204.51M	247.34M	243.03M	236.79M	239.52M
	Total Debt
3.19M	64.92M	87.05M	85.97M	79.79M	84.73M
	Net Debt
-16.93M	41.84M	64.42M	55.38M	32.27M	41.00M
	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: Positive
• Last Price: 4.73
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For III, the sentiment is Positive. The current price of 4.73 is above the 20-day moving average (MA) of 4.73, above the 50-day MA of 4.20, and above the 200-day MA of 3.47, indicating a bullish trend. The MACD of 0.15 indicates Positive momentum. The RSI at 56.65 is Neutral, neither overbought nor oversold. The STOCH value of 55.95 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for III.

Information Services Group Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TSSI	69 Neutral	$460.13M	51.80	137.01%	―	262.87%	873.76%
III	67 Neutral	$230.42M	30.77	8.09%	3.81%	-12.26%	―
Sector *	62 Neutral	$11.80B	10.08	-7.46%	2.99%	7.37%	-8.21%
PSFE	57 Neutral	$765.99M	39.11	-0.04%	―	3.50%	95.90%
TTEC	54 Neutral	$252.08M	―	-73.85%	1.14%	-9.86%	-2426.25%
UIS	51 Neutral	$314.83M	―	192.24%	―	-1.72%	82.15%
TLS	47 Neutral	$205.02M	―	-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.