Spar Group (SGRP) AI Stock Analysis

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Spar Group

(NASDAQ:SGRP)

67Neutral

Spar Group's overall stock score reflects a mix of strong valuation and improved financial metrics against a backdrop of revenue decline and weak technical indicators. The low P/E ratio suggests undervaluation, but challenges in cash flow generation and lack of earnings call insights temper enthusiasm.

Spar Group (SGRP) vs. S&P 500 (SPY)

Market Cap

$24.86M

Dividend YieldN/A

Average Volume (3M)59.24K

Price to Earnings (P/E)2.1

Beta (1Y)-0.36

Revenue Growth-12.74%

EPS Growth751.07%

CountryUS

Employees1,384

SectorIndustrials

Sector Strength78

IndustrySpecialty Business Services

Share Statistics

EPS (TTM)0.51

Shares Outstanding23,449,701

10 Day Avg. Volume35,022

30 Day Avg. Volume59,243

Financial Highlights & Ratios

PEG Ratio0.00275

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap2.40

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit1.08

Enterprise Value/EbitdaN/A

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

Spar Group Business Overview & Revenue Model

Company DescriptionSpar Group, Inc. (SGRP) is a leading global provider of merchandising and marketing services. The company specializes in providing a wide range of services, including in-store merchandising, product demonstrations, and retail audits. Spar Group operates across multiple sectors, including consumer goods, electronics, and retail, delivering customized solutions to enhance product visibility and brand promotion for its clients.

How the Company Makes MoneySpar Group generates revenue primarily through service contracts with various retail and manufacturing clients who require merchandising and marketing services. The company focuses on several key revenue streams, including in-store merchandising, where it assists in product setup, shelf maintenance, and promotional displays. Additionally, Spar Group earns money through product demonstrations and sampling events, which help brands engage directly with consumers. Retail audits and compliance checks also contribute to its revenue by ensuring that stores adhere to promotional guidelines and maintain optimal product presentation. Strategic partnerships with major retailers and consumer goods companies are significant factors that bolster Spar Group's earnings, providing a consistent flow of projects and service opportunities.

Spar Group Financial Statement Overview

Summary

Spar Group's financial performance is mixed. While profitability margins and leverage have improved, indicating operational efficiency and financial stability, the decline in revenue by 12.89% and a significant drop in free cash flow generation pose challenges for sustaining growth.

Income Statement

Positive

The company's income statement shows a mixed performance. The TTM (Trailing-Twelve-Months) gross profit margin is 20.06%, which has slightly decreased from the previous year's 21.12%. The TTM net profit margin stands at 5.35%, showing a significant increase from 1.49% in 2023, indicating improved profitability. However, revenue has decreased by approximately 12.89% in the TTM period compared to 2023, indicating a challenge in maintaining sales growth. EBIT margin improved to 4.34% in the TTM from 3.58% in 2023, and the EBITDA margin improved to 5.01% from 3.80%, reflecting better operational efficiency.

Balance Sheet

Positive

The balance sheet displays a stable financial position. The debt-to-equity ratio in the TTM is 0.72, which has improved from 0.83 in 2023, showing a reduction in leverage. The return on equity (ROE) has increased significantly to 41.80% in the TTM from 13.82% in 2023, indicating better returns to shareholders. The equity ratio stands at 43.44% in the TTM, showing a slight improvement from 31.26% in 2023 and suggesting a stable capital structure.

Cash Flow

Positive

The cash flow statement reveals some positive trends and challenges. The free cash flow growth rate has decreased by approximately 39.34% in the TTM, reflecting a drop in free cash flow generation. The operating cash flow to net income ratio is 0.36 in the TTM, which is relatively lower, suggesting challenges in converting income to cash. The free cash flow to net income ratio in the TTM is 0.28, indicating limited cash flow generation relative to net income.

Dec 2023	Dec 2022	Dec 2021	Dec 2020	Dec 2019
Breakdown
Income Statement		Total Revenue
262.75M	261.27M	255.72M	230.52M	252.88M
	Gross Profit
55.48M	51.01M	47.52M	45.19M	49.25M
	EBIT
9.40M	8.33M	4.18M	9.72M	10.19M
	EBITDA
10.18M	8.55M	7.90M	14.14M	13.54M
	Net Income Common Stockholders
3.90M	2.13M	2.00M	8.96M	5.83M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
10.72M	9.35M	13.47M	15.97M	10.46M
	Total Assets
90.28M	94.60M	89.02M	84.03M	81.33M
	Total Debt
23.37M	20.32M	13.52M	13.23M	15.18M
	Net Debt
12.65M	10.98M	50.00K	-2.74M	4.72M
	Total Liabilities
50.03M	56.54M	51.67M	45.41M	49.96M
	Stockholders Equity
28.23M	22.43M	19.75M	22.16M	18.95M
Cash Flow		Free Cash Flow
5.58M	-6.84M	907.00K	7.20M	4.77M
	Operating Cash Flow
6.82M	-5.04M	2.63M	8.80M	6.15M
	Investing Cash Flow
-2.27M	-1.80M	-1.72M	-1.60M	-1.38M
	Financing Cash Flow
-3.02M	3.49M	1.33M	131.00K	-1.97M

Spar Group Technical Analysis

Technical Analysis Sentiment

Negative

Last Price1.06

Price Trends

50DMA

1.33

Negative

100DMA

1.64

Negative

200DMA

1.92

Negative

Market Momentum

MACD

-0.07

Negative

RSI

30.37

Neutral

STOCH

31.25

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SGRP, the sentiment is Negative. The current price of 1.06 is below the 20-day moving average (MA) of 1.14, below the 50-day MA of 1.33, and below the 200-day MA of 1.92, indicating a bearish trend. The MACD of -0.07 indicates Negative momentum. The RSI at 30.37 is Neutral, neither overbought nor oversold. The STOCH value of 31.25 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SGRP.

Spar Group Risk Analysis

Spar Group disclosed 16 risk factors in its most recent earnings report. Spar Group reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Spar Group Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ACN	77 Outperform	$181.42B	23.91	27.26%	1.88%	4.10%	9.78%
OMC	69 Neutral	$14.86B	10.14	36.50%	3.70%	5.84%	-1.17%
WPP	69 Neutral	$8.45B	12.18	16.04%	6.58%	2.07%	407.27%
IPG	69 Neutral	$9.16B	13.47	13.33%	5.29%	-3.18%	-53.36%
SGRP	67 Neutral	$24.86M	2.07	45.55%	―	-12.74%	751.07%
Sector *	64 Neutral	$4.28B	11.80	5.30%	250.74%	4.12%	-9.02%
ADV	45 Neutral	$446.25M	―	-40.41%	―	-15.17%	-567.89%

* Industrials Sector Average

Performance Comparison

SGRP

Spar Group

1.06

-0.66

-38.37%

ACN

Accenture

305.33

4.62

1.54%

IPG

Interpublic Group of Companies

25.38

-4.14

-14.02%

OMC

Omnicom Group

77.07

-13.30

-14.72%

WPP

39.15

-9.57

-19.64%

ADV

Advantage Solutions

1.38

-3.14

-69.47%

Spar Group Earnings Call Summary

Earnings Call Date:Mar 27, 2025

(Q2-2024)

% Change Since: -23.74%|

Next Earnings Date:May 14, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted strong performance in the core Americas segment and significant growth in net income, driven by strategic focus and successful acquisitions. However, revenue declines due to strategic exits and margin compression in the remodeling business pose challenges. Overall, the focus on core markets and strategic management indicates a positive outlook despite current challenges.

Q2-2024 Updates

Positive Updates

Strong Performance in the Americas

The Americas segment generated $54 million, marking a 3.8% increase compared to the prior year. The United States revenue was up 37% over last year, with the remodel business growing by 88% over last year in the second quarter.

Significant Growth in Net Income

Net income attributable to SPAR Group, Inc. for Q2 was $3.6 million or $0.15 per share, a significant increase from $639,000 or $0.03 per share in the year-ago quarter.

Successful Strategic Exits and Acquisitions

Completed the acquisition of the remaining 49% of Resource Plus, now owning 100% of all U.S. businesses. The strategic exit from South Africa, China, Australia, and NMS joint ventures resulted in 0 revenues from these entities, focusing on core markets.

Improved Gross Margin

Consolidated gross margin for the quarter was 19.2%, a 100 basis point improvement over the first quarter.

Reduction in SG&A Expenses

SG&A for the second quarter was $9.5 million, down $1.1 million from $10.6 million last year, indicating careful management of expenses.

Negative Updates

Revenue Decline from Strategic Exits

Net revenues totaled $57.3 million, reflecting a decline from the prior year due to strategic exits from South Africa, China, Australia, and NMS joint ventures.

Gross Profit Margin Compression

Gross profit for the second quarter was $11 million or 19.2% of revenues compared to $13.1 million or 19.9% of revenue in the prior year quarter, due to a shift towards the remodeling business with higher costs.

Adjusted EBITDA Decline

Consolidated adjusted EBITDA was $1.9 million compared to $2.6 million in the prior year, indicating a decline in underlying profitability excluding one-time gains.

Company Guidance

During the SPAR Group's Q2 2024 earnings call, the company reported a consolidated revenue of $57.3 million, primarily driven by the Americas segment, which accounted for $54 million, marking a 3.8% increase from the prior year. The United States saw a 37% revenue increase, while Canada experienced a 14% rise, largely due to the recovery in the remodel business. The company's consolidated gross margin improved to 19.2%, reflecting a 100 basis point increase over the first quarter. Selling, general and administrative (SG&A) expenses were $9.5 million, down $1.1 million from the previous year, but represented a 60 basis point increase as a percentage of revenue. The company reported a consolidated EBITDA of $6.4 million, a significant increase from the prior year's $2.5 million, and net income attributable to SPAR was $3.6 million, or $0.15 per share. Additionally, the strategic exit from several international joint ventures and the acquisition of the remaining 49% of Resource Plus contributed to these results. The company emphasized its focus on growth in the U.S. and Canada, where it sees significant potential, supported by a strong financial position with total worldwide liquidity of $33.5 million as of June 30, 2024.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

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.