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TSS (TSSI)
NASDAQ:TSSI
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TSS
(NASDAQ:TSSI)
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Rating:65Neutral
Price Target:
$12.50
▼(-25.99% Downside)
Action:ReiteratedDate:03/18/26
The score is driven primarily by improved financial performance (revenue/earnings step-up and better leverage) but is constrained by weak free-cash-flow conversion and historical cash-flow volatility. Technicals are moderately positive (bullish momentum and price above key short/mid-term averages), while valuation appears reasonable on P/E. Earnings call guidance is supportive, though operational and procurement-related risks temper the outlook.
Positive Factors
Revenue & EBITDA Growth
Sustained top-line and adjusted EBITDA expansion demonstrates improved product-market fit and scalable operations across core segments. Higher recurring systems-integration revenue and better margins give management room to reinvest in growth initiatives and improve long-term profitability and resilience.
AI & Systems Integration Momentum
Growth in AI-enabled systems integration aligns the company with secular demand for high-performance and edge computing. Investments in personnel and infrastructure to serve AI workloads expand the addressable market and should support higher-margin services and stickier customer relationships over the medium term.
Improved Capital Structure & Funding
Meaningful deleveraging and a sizable equity raise materially increase financial flexibility. A stronger balance sheet lowers refinancing risk, funds strategic investments (AI, modular data centers), and provides capacity to absorb short-term cash volatility while pursuing organic growth or acquisitions.
Negative Factors
Weak Free Cash Flow Conversion
Low free cash flow despite solid operating cash suggests heavy reinvestment, elevated capex or working-capital strain. Persistent weak FCF reduces internal funding for growth, increases reliance on external capital, and magnifies downside if revenue or margins slip, limiting durable financial self-sufficiency.
Historical Profitability & Cash Volatility
A track record of volatile earnings and intermittent losses complicates forecasting and heightens execution risk. If cyclical or contractual revenue weakens, prior volatility suggests margins and returns could revert, pressuring investment plans and stakeholder confidence over the medium term.
Operational & Procurement Concentration Risk
Operational ramp issues at the new facility and dependency on government procurement create structural execution and revenue-timing risks. These constraints raise unit costs, delay margin recovery from capacity investments, and make revenue more sensitive to external procurement cycles and operational execution.
TSS (TSSI) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$304.12M
Dividend YieldN/A
Average Volume (3M)1.49M
Price to Earnings (P/E)10.9
Beta (1Y)4.02
Revenue Growth91.66%
EPS Growth7.52%
CountryUS
Employees161
SectorTechnology
Sector Strength88
IndustryInformation Technology Services
Share Statistics
EPS (TTM)0.41
Shares Outstanding27,773,594
10 Day Avg. Volume2,906,898
30 Day Avg. Volume1,485,203
Financial Highlights & Ratios
PEG Ratio0.08
Price to Book (P/B)2.16
Price to Sales (P/S)0.67
P/FCF Ratio78.03
Enterprise Value/Market Cap0.72
Enterprise Value/Revenue0.89
Enterprise Value/Gross Profit7.00
Enterprise Value/Ebitda18.68
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)0.19
Revenue Forecast (FY)$179.55M
TSS Business Overview & Revenue Model
Company DescriptionTSS, Inc. provides services for the planning, design, deployment, maintenance, and refurbishment of end-user and enterprise systems, including the mission-critical facilities in the United States. The company operates through two segments, Facilities and Systems Integration. It offers a single source solution for enabling technologies in data centers, operations centers, network facilities, server rooms, security operations centers, communications facilities, and the infrastructure systems. The company also provides technology consulting, design and engineering, project management, systems integration, systems installation, facilities management, and IT procurement and reseller services. It serves IT OEM equipment, technology, and service companies; private sector businesses; and government or commercial end users. The company was formerly known as Fortress International Group, Inc. and changed its name to TSS, Inc. in June 2013. TSS, Inc. was incorporated in 2004 and is headquartered in Round Rock, Texas.
TSS Earnings Call Summary
Earnings Call Date:Nov 13, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:May 18, 2026
Earnings Call Sentiment Neutral
The earnings call highlighted significant year-to-date growth and strategic investments positioning the company for future expansion, particularly in AI and high-performance computing infrastructure. However, challenges such as third-quarter revenue declines, operational issues at the new facility, and impacts from the government shutdown were notable. The company remains optimistic with a strong outlook for future growth.Q3-2025 Updates
Positive Updates
Exceptional Year-to-Date Growth
Revenues up 88% and adjusted EBITDA up 59% compared to the same period last year, with positive cash flow from operations of $18.5 million.
Systems Integration Business Growth
20% revenue growth in the Systems integration segment driven by increasing demand for AI-enabled infrastructure.
Strategic Investments and Expansion
Opened a new facility in Georgetown to meet growing demand, with enhanced electrical capacity to support next-generation chip technology.
Positive Financial Position
Raised $113 million from a stock offering, reinforcing the balance sheet and positioning the company for strategic investments.
Strong Future Outlook
Expecting another record year in 2026 with initial guidance of 40% to 50% organic EBITDA growth.
Negative Updates
Third Quarter Revenue Decline
Third quarter revenues were down year-over-year primarily due to lower revenues from procurement services.
Operational Challenges in New Facility
Delays in ramping up rack integration volumes due to unforeseen operational requirements and process improvements needed at the new facility.
Impact of Government Shutdown
Procurement services impacted by the government shutdown, leading to uncertainty in deal closures and a cautious Q4 forecast.
Facilities Management Revenue Drop
Revenues in the Facilities management segment declined 19% year-over-year, although there was a sequential increase.
Increased Costs and Expenses
Higher SG&A expenses, primarily due to increased headcount and noncash stock compensation, as well as significant unabsorbed electricity costs.
Company Guidance
During the TSS, Inc. third-quarter 2025 earnings call, the company reported a significant 88% increase in revenue and a 59% rise in adjusted EBITDA for the first nine months of 2025 compared to the previous year, driven largely by growth in their systems integration segment. Despite a year-over-year decrease in third-quarter revenue to $41.9 million, primarily due to variability in procurement services, the company remains optimistic. The procurement services segment, which primarily serves the Department of Defense, contributed over $30 million in revenue for the quarter, although the government shutdown impacted deal processing. Systems integration revenue grew 20%, with the company investing in infrastructure and personnel to meet increasing demand for AI-enabled infrastructure. Facilities management revenue, representing 4% of total revenue, declined 19% year-over-year but increased 7% sequentially. TSS anticipates a strong rebound in adjusted EBITDA in Q4, with full-year 2025 projected EBITDA growth of 50% to 75%. Looking ahead, TSS expects 40% to 50% organic EBITDA growth in 2026, supported by strategic investments and potential acquisitions in AI, edge computing, and modular data centers.TSS Financial Statement Overview
Summary
Strong recent revenue and earnings improvement and a less-levered balance sheet versus 2024 support the score. It is held back by weak free-cash-flow conversion in TTM (despite strong operating cash flow) and a history of volatile profitability and cash generation.Income Statement
Profitability and scale improved meaningfully. Revenue expanded sharply from 2023 to 2024 and further increased in TTM (Trailing-Twelve-Months) 2025, while net margin rose from ~4.0% (2024) to ~6.2% (TTM). That said, gross and operating margins are thinner than earlier years (e.g., gross margin ~13% in TTM vs ~20% in 2023), and the company has a history of uneven profitability (losses in 2021–2022), which adds some cyclicality/execution risk.76
Positive
Balance Sheet
Leverage risk looks improved versus 2024: debt relative to equity moved from very high (debt-to-equity ~4.6x in 2024) to more moderate levels in TTM (Trailing-Twelve-Months) (~0.54x), alongside a much larger equity base. Returns on equity are very strong (TTM ~38%), but they have also been volatile across years, and the prior period’s heavy leverage highlights that the capital structure can change quickly.64
Positive
Cash Flow
Operating cash generation is strong in TTM (Trailing-Twelve-Months) 2025 (~$34.9M), but the conversion into free cash flow is weak (~$2.1M) and deteriorated sharply versus 2024, indicating heavier reinvestment or working-capital/capex pressure. Cash flow consistency is also a concern given large negative operating and free cash flow in 2021 and 2023, suggesting higher variability than earnings alone imply.46
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Mar 2023 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 245.72M | 148.14M | 54.40M | 30.64M | 27.41M |
| Gross Profit | 31.29M | 22.35M | 11.00M | 8.98M | 6.36M |
| EBITDA | 11.73M | 9.48M | 2.07M | 1.30M | -266.00K |
| Net Income | 15.13M | 5.98M | 74.00K | -73.00K | -1.30M |
Balance Sheet | |||||
| Total Assets | 184.94M | 96.57M | 25.60M | 31.41M | 19.28M |
| Cash, Cash Equivalents and Short-Term Investments | 85.51M | 23.22M | 11.83M | 20.40M | 8.00M |
| Total Debt | 41.64M | 32.71M | 4.32M | 4.78M | 7.61M |
| Total Liabilities | 108.30M | 89.43M | 22.05M | 28.47M | 17.08M |
| Stockholders Equity | 76.64M | 7.14M | 3.55M | 2.93M | 2.20M |
Cash Flow | |||||
| Free Cash Flow | 2.12M | 6.81M | -8.53M | 14.18M | -10.52M |
| Operating Cash Flow | 34.86M | 15.30M | -8.27M | 14.71M | -10.45M |
| Investing Cash Flow | -32.74M | -8.48M | -257.00K | -536.00K | -64.00K |
| Financing Cash Flow | 60.17M | 4.58M | -40.00K | -1.77M | -504.00K |
TSS Technical Analysis
Neutral
16.89
Price Trends
9.86
Positive
10.28
Positive
15.26
Negative
Market Momentum
0.61
Negative
55.03
Neutral
32.68
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSSI, the sentiment is Neutral. The current price of 16.89 is above the 20-day moving average (MA) of 10.32, above the 50-day MA of 9.86, and above the 200-day MA of 15.26, indicating a neutral trend. The MACD of 0.61 indicates Negative momentum. The RSI at 55.03 is Neutral, neither overbought nor oversold. The STOCH value of 32.68 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSSI.
TSS Risk Analysis
TSS disclosed 23 risk factors in its most recent earnings report. TSS reported the most risks in the "Production" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
TSS Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $375.49M | 10.52 | 31.85% | ― | 12.86% | 54.95% | |
65 Neutral | $304.12M | 10.94 | 38.06% | ― | 91.66% | 7.52% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
55 Neutral | $321.36M | -10.17 | -31.77% | ― | 17.44% | 41.97% | |
52 Neutral | $334.51M | 42.13 | 10.27% | 2.41% | 0.68% | -67.84% | |
47 Neutral | $174.92M | -0.29 | -107.19% | 17.14% | 3.67% | 29.09% | |
43 Neutral | $185.65M | -1.68 | -20.84% | ― | -12.45% | -142.77% |
* Technology Sector Average
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.