Technology stock

Is Verb Technology Stock a Buy Under $1?

Verb Technology Company, Inc. (VERB) in Newport Beach, California, develops Software-as-a-Service application platforms globally. The company recently announced its partnership with Momentum Factor to provide direct selling businesses with the first-of-its-kind social compliance solution.

The stock is down 23.8% in the past month and 76.8% in the past nine months to close yesterday’s trading session at $0.48. VERB is currently trading 87.9% below its 52-week high of $3.97, which it reached on July 15, 2021.

The company recently entered into a securities purchase agreement with institutional investors to buy and sell 14.67 million shares of common stock in a direct registered offering at market price, raising aggregate gross proceeds of $11 million. of dollars. This diluted the ownership percentage of existing shareholders. Thus, VERB’s near-term outlook looks bleak.

Here’s what could influence VERB’s performance in the coming months:

Revenue growth does not translate into improved bottom line

For its first fiscal quarter ended March 31, 2022, VERB’s revenue jumped 6.5% year over year to $2.69 million. However, its modified EBITDA loss was $5.47 million, compared to $6.51 million in the year-ago quarter. Its net loss was $6.99 million, compared to $8.35 million in the prior year period. Additionally, its loss per share was $0.09, down from $0.16 a year ago.

Low profitability

In terms of 12-month CAPEX/sales, VERB’s 0.24% is 89.6% below the industry average of 2.35%. Its asset turnover rate of 0.26% over the last 12 months is 58.7% below the industry average of 0.63%. Additionally, the stock’s 12-month ROCE, ROTC and ROTA are negative compared to the respective industry averages of 7.81%, 4.80% and 3.48%.

Extended valuation

In terms of forward EV/S, VERB’s 3.40x is 22% better than the industry average of 2.79x. And its forward P/S of 2.77x is better than the industry average of 2.69x.

POWR ratings reflect bleak outlook

VERB has an overall D rating, which is equivalent to Sell in our POWR rating system. POWR ratings are calculated by considering 118 separate factors, with each factor weighted to an optimal degree.

Our proprietary scoring system also rates each stock against eight distinct categories. VERB has an F rating for quality, in line with its lower profitability ratios than the industry.

The stock has a D rating for stability, which matches its beta of 1.08. Additionally, VERB has a D rating for Sentiment. This is warranted as analysts expect its EPS to remain negative in the current quarter, next quarter, current year and next year.

VERB is ranked #132 out of 156 stocks in the software industry – F-rated applications. Click here to access VERB’s Growth, Value and Momentum Ratings.

Click here to view our Software Industry Report for 2022

Conclusion

VERB is currently trading below its 50-day and 200-day moving averages of $0.71 and $1.41, respectively, indicating a downtrend. Since the stock looks overvalued at its current price level, we think it’s best to avoid it now.

How does Purple Innovation (VERB) compare to its peers?

Although VERB has an overall POWR rating of D, one might consider investing in the following software – App Stocks with an A (Strong Buy) rating: Commvault Systems, Inc. (CVLT), Rimini Street Inc. (RMNI ) and Progress Software Corporation (PRGS).

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VERB shares were trading at $0.49 per share on Wednesday morning, up $0.01 (+2.08%). Year-to-date, VERB is down -60.48%, compared to a -16.46% rise in the benchmark S&P 500 over the same period.

About the Author: Nimesh Jaiswal

At Nimesh Jaiswal His passionate interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving the price of a stock is the key approach he follows while advising investors in his articles. After…

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