Information Services Group (III) AI Stock Analysis

• Market Cap: $250.91M
• Dividend Yield: 2.97%
• Average Volume (3M): 264.24K
• Price to Earnings (P/E): 27.0
• Beta (1Y): 0.67
• Revenue Growth: -5.74%
• EPS Growth: N/A
• Country: US
• Employees: 1,300
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): 0.06
• Shares Outstanding: 47,884,106
• 10 Day Avg. Volume: 235,734
• 30 Day Avg. Volume: 264,239
• PEG Ratio: -1.04
• Price to Book (P/B): 1.69
• Price to Sales (P/S): 0.66
• P/FCF Ratio: 9.57
• Enterprise Value/Market Cap: 1.31
• Enterprise Value/Revenue: 1.37
• Enterprise Value/Gross Profit: 3.24
• Enterprise Value/Ebitda: 14.54
• 1Y Price Target: $6.75
• Price Target Upside: 27.60% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2
• EPS Forecast (FY): 0.16
• Revenue Forecast (FY): $244.38M

• Rating: 69 Neutral
• Price Target: $5.50 ▲(3.97% Upside)

The overall stock score of 69 reflects a strong financial performance and positive earnings call sentiment, driven by AI-related growth and improved profitability. However, the stock's valuation appears high, and technical indicators suggest mixed momentum. Challenges in the Asia Pacific region and slower European recovery also weigh on the score.

Positive Factors

AI-Driven Growth

The significant increase in AI-related revenue indicates a strong market demand and ISG's capability to capitalize on this trend, enhancing long-term growth prospects.

Increased Profitability

Improved profitability and margin expansion demonstrate operational efficiency and the ability to convert revenue into earnings, supporting sustainable growth.

Strong Cash Flow

Robust cash flow generation enhances financial flexibility and supports strategic investments, underpinning long-term business stability.

Negative Factors

Decline in Asia Pacific Revenue

The decline in Asia Pacific revenue highlights regional challenges and dependency on other markets, which could impact overall growth if not addressed.

Slow Recovery in European Transformation

Sluggish transformation in Europe suggests potential hurdles in adapting to market changes, which may affect competitive positioning and growth.

Revenue Growth Challenges

Persistent revenue growth challenges indicate potential market saturation or competitive pressures, which could hinder long-term expansion.

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

ISG generates revenue primarily through its consulting and advisory services, which include project-based engagements, retainer agreements, and subscription-based access to its research and data analytics platforms. Key revenue streams include fees for strategic advisory projects, ongoing consulting services, and the sale of proprietary market research reports. The company also benefits from partnerships with technology providers, enabling it to offer clients comprehensive solutions and access to innovative technologies. Additionally, ISG's strong reputation in the market and its ability to deliver measurable results for clients contribute significantly to its earnings.

Information Services Group Financial Statement Overview

Summary

Information Services Group exhibits a solid financial performance with notable improvements in revenue growth and cash flow generation. The company has managed to enhance its profitability margins and maintain a stable balance sheet. While leverage remains a consideration, the overall financial health is strong, supported by efficient cash flow management and improved equity returns.

Income Statement

The company demonstrates strong revenue growth in the TTM period with a 45.3% increase, recovering from a decline in the previous year. Gross profit margin has improved to 41.8% in the TTM, indicating efficient cost management. However, net profit margin remains relatively low at 3.3%, suggesting room for improvement in profitability. EBIT and EBITDA margins have also improved, reflecting better operational efficiency.

Balance Sheet

The debt-to-equity ratio has decreased slightly to 0.66 in the TTM, indicating a stable leverage position. Return on equity has improved to 8.2%, showing better utilization of equity to generate profits. The equity ratio remains stable, suggesting a balanced capital structure. However, the company still carries a significant amount of debt, which could pose risks if not managed properly.

Cash Flow

The company shows strong free cash flow growth of 4.1% in the TTM, indicating improved cash generation capabilities. The operating cash flow to net income ratio is robust at 0.75, suggesting efficient conversion of income into cash. The free cash flow to net income ratio is high at 0.91, reflecting strong cash flow relative to earnings, which is a positive sign for liquidity and financial health.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	241.29M	247.59M	291.05M	286.27M	277.83M	249.13M
Gross Profit	101.92M	97.28M	112.14M	116.62M	109.36M	99.25M
EBITDA	22.68M	16.95M	21.21M	35.21M	30.78M	15.63M
Net Income	9.77M	2.84M	6.15M	19.73M	15.53M	2.75M
Balance Sheet
Total Assets	213.25M	204.51M	247.34M	243.03M	236.79M	239.52M
Cash, Cash Equivalents and Short-Term Investments	28.73M	23.07M	22.64M	30.59M	47.52M	43.73M
Total Debt	68.51M	64.92M	87.05M	85.97M	79.79M	84.73M
Total Liabilities	118.56M	108.23M	145.26M	142.60M	138.40M	140.38M
Stockholders Equity	94.69M	96.29M	102.08M	100.43M	98.39M	99.14M
Cash Flow
Free Cash Flow	26.71M	17.03M	8.84M	7.72M	39.62M	42.79M
Operating Cash Flow	30.50M	19.86M	12.27M	11.15M	41.94M	43.97M
Investing Cash Flow	17.11M	18.99M	-4.43M	-6.87M	-2.32M	-3.50M
Financing Cash Flow	-28.86M	-37.91M	-16.20M	-18.94M	-34.13M	-15.70M

Information Services Group Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 5.29
• 50DMA: Negative
• 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 5.29 is below the 20-day moving average (MA) of 5.39, below the 50-day MA of 5.51, and above the 200-day MA of 4.54, indicating a neutral trend. The MACD of -0.10 indicates Positive momentum. The RSI at 47.71 is Neutral, neither overbought nor oversold. The STOCH value of 53.33 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
III	69 Neutral	$250.91M	27.04	10.22%	2.97%	-5.74%	―
HCKT	64 Neutral	$485.84M	29.49	10.27%	2.48%	0.68%	-67.84%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
TLS	52 Neutral	$427.04M	―	-23.73%	―	17.44%	41.97%
TTEC	46 Neutral	$150.50M	―	-6.65%	―	-5.70%	94.70%
CNDT	44 Neutral	$278.26M	―	-15.87%	―	-12.45%	-142.77%
UIS	38 Underperform	$240.26M	-2.85	―	―	-4.93%	18.65%

Information Services Group Corporate Events

ISG Earnings Call: AI-Driven Growth Fuels Optimism

The recent earnings call for Information Services Group (ISG) reflected a generally positive sentiment, driven by strong revenue growth and increased profitability, particularly in the Americas and Europe. The company has successfully leveraged AI demand to boost its financial performance, although challenges persist in the Asia Pacific region and with the slower pace of transformation recovery in Europe. Overall, the call conveyed optimism about the company’s future, with a focus on AI-powered growth and margin expansion.

Information Services Group Faces Heightened Risks from Employment Claims and Legal Challenges

Information Services Group faces significant business risks from potential employment-related claims and commercial indemnification obligations. These risks include wage and hour violations, contractual disputes, and government inquiries, which could lead to costly litigation or settlements. The introduction of new labor laws in various jurisdictions may further heighten their exposure to such claims. Additionally, the company may be liable for the actions of its consultants, potentially resulting in fines, penalties, or reputational damage that are not covered by insurance.

Information Services Group Reports Strong Q3 2025 Results

Information Services Group (ISG) is a global AI-centered technology research and advisory firm, renowned for its expertise in technology and business services, and a trusted partner to over 900 clients worldwide. In its latest earnings report, ISG announced a strong financial performance for the third quarter of 2025, with revenues reaching $62 million, an 8% increase from the previous year, excluding results from its divested automation unit. The company also reported a net income of $3.1 million and an adjusted EBITDA of $8.4 million, marking a 19% increase over the prior year.

ISG Earnings Call: AI Fuels Strong Growth

The recent earnings call for Information Services Group (ISG) painted a picture of robust growth, primarily fueled by advancements in AI and technological investments. The sentiment was optimistic, particularly with the strong performance in the Americas, although challenges in the European and Asia Pacific regions were noted. The acquisition of Martino & Partners and the significant increase in AI-related revenue were highlighted as positive indicators for future growth.

Information Services Group Faces Financial Risks from Employment Claims and Indemnification Obligations

Information Services Group faces significant business risks due to potential employment-related claims and commercial indemnification obligations. These risks include wage and hour violation claims, contractual disputes, and government inquiries, which could lead to costly litigation or settlements adversely affecting their financial health. Furthermore, evolving employment laws may heighten their exposure to such claims. Additionally, broad indemnification agreements with clients expose the company to liabilities for consultant actions, potentially resulting in uninsured losses, fines, or reputational damage.

Information Services Group Reports Strong Q2 2025 Results

Information Services Group (ISG) is a global AI-centered technology research and advisory firm, known for its expertise in technology and business services, helping organizations maximize the value of their technology investments. In its latest earnings report for the second quarter of 2025, ISG announced revenues of $62 million, surpassing its guidance and marking a 7% increase from the previous year, excluding results from its divested automation unit. The company also reported a GAAP net income of $2.2 million and adjusted EBITDA of $8.3 million, reflecting a 17% increase from the prior year.