Information Services Group (III) AI Stock Analysis

• Market Cap: $278.09M
• Dividend Yield: 3.12%
• Average Volume (3M): 215.14K
• Price to Earnings (P/E): 37.0
• Beta (1Y): 0.66
• Revenue Growth: -9.86%
• EPS Growth: N/A
• Country: US
• Employees: 1,300
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): 0.04
• Shares Outstanding: 48,195,470
• 10 Day Avg. Volume: 256,458
• 30 Day Avg. Volume: 215,141
• 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: 1.00
• Enterprise Value/Revenue: 1.16
• Enterprise Value/Gross Profit: 2.77
• Enterprise Value/Ebitda: 12.40
• 1Y Price Target: $6.00
• Price Target Upside: 3.99% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2

• Rating: 74 Outperform
• Price Target: $6.50 ▲(12.65% Upside)

The overall stock score of 74 reflects strong earnings call performance and positive technical indicators, offset by valuation concerns. Financial performance is stable but faces challenges in revenue growth and profitability. The company's strategic focus on AI and acquisitions supports a positive outlook.

Positive Factors

AI Revenue Growth

The strategic pivot towards AI has significantly boosted revenue, indicating a strong growth trajectory in a high-demand sector, enhancing long-term competitiveness and market position.

Cash Generation

Strong cash generation reflects effective financial management, providing the company with flexibility to invest in growth opportunities and weather economic fluctuations.

Strategic Acquisition

The acquisition enhances ISG's capabilities and client base in Europe, particularly in the public sector, strengthening its market position and potential for future growth.

Negative Factors

Revenue Decline

A decline in revenue growth indicates potential challenges in maintaining market share and competitiveness, which could impact long-term profitability and business sustainability.

Flat Revenue in Asia Pacific

Stagnant revenue in a key growth region like Asia Pacific suggests difficulties in expanding market presence, which could limit overall company growth and diversification.

High Tax Rate Impact

A significantly higher tax rate reduces net income, affecting profitability and potentially limiting resources available for reinvestment and shareholder returns.

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 demonstrates a stable financial position with operational improvements. The income statement shows challenges in revenue growth and profitability, but the balance sheet is solid with manageable leverage. Cash flow is a strong point, highlighting effective cash management.

Income Statement

The income statement shows a mixed performance. Gross profit margins have been relatively stable, but there is a noticeable decline in revenue growth, with a negative growth rate in the TTM period. Net profit margins are low, indicating challenges in converting revenue into profit. However, the company has managed to improve its EBIT and EBITDA margins over time, suggesting operational improvements.

Balance Sheet

The balance sheet reflects a moderate financial position. The debt-to-equity ratio is manageable, indicating a balanced approach to leveraging. Return on equity has shown improvement, although it remains modest. The equity ratio suggests a stable capital structure, but there is room for strengthening equity further.

Cash Flow

Cash flow analysis reveals strong free cash flow growth in the TTM period, which is a positive sign of financial health. The operating cash flow to net income ratio indicates efficient cash generation relative to net income. However, the free cash flow to net income ratio suggests that while cash flow is strong, net income conversion could be improved.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	240.20M	247.59M	291.05M	286.27M	277.83M	249.13M
Gross Profit	100.33M	97.28M	112.14M	116.62M	109.36M	99.25M
EBITDA	22.39M	16.95M	21.21M	35.05M	30.60M	18.57M
Net Income	7.86M	2.84M	6.15M	19.73M	15.53M	2.75M
Balance Sheet
Total Assets	200.67M	204.51M	247.34M	243.03M	236.79M	239.52M
Cash, Cash Equivalents and Short-Term Investments	25.22M	23.07M	22.64M	30.59M	47.52M	43.73M
Total Debt	62.19M	64.92M	87.05M	85.97M	79.79M	84.73M
Total Liabilities	106.58M	108.23M	145.26M	142.60M	138.40M	140.38M
Stockholders Equity	94.10M	96.29M	102.08M	100.43M	98.39M	99.14M
Cash Flow
Free Cash Flow	25.65M	17.04M	8.84M	7.72M	39.62M	42.79M
Operating Cash Flow	28.25M	19.86M	12.27M	11.15M	41.94M	43.97M
Investing Cash Flow	19.23M	18.99M	-4.43M	-6.87M	-2.32M	-3.50M
Financing Cash Flow	-34.89M	-37.91M	-16.20M	-18.94M	-34.13M	-15.70M

Information Services Group Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 5.77
• 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 5.77 is above the 20-day moving average (MA) of 5.52, above the 50-day MA of 5.04, and above the 200-day MA of 4.12, indicating a bullish trend. The MACD of 0.20 indicates Positive momentum. The RSI at 62.44 is Neutral, neither overbought nor oversold. The STOCH value of 55.24 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	74 Outperform	$278.09M	36.96	8.29%	3.12%	-9.86%	―
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
HCKT	61 Neutral	$524.90M	31.86	15.27%	2.46%	4.18%	-51.62%
TLS	58 Neutral	$493.65M	―	-41.49%	―	-13.76%	-75.18%
UIS	55 Neutral	$279.47M	―	192.24%	―	-1.53%	78.84%
CNDT	53 Neutral	$434.43M	89.29	2.21%	―	-14.36%	-73.74%
TTEC	44 Neutral	$173.98M	―	-9.11%	1.75%	-8.21%	91.83%

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.