Globalstar Inc (GSAT): A Deep Dive into Its Performance Potential
Long-established in the Telecommunication Services industry, Globalstar Inc (GSAT) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 4.1%, juxtaposed with a three-month change of 17.13%. However, fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Globalstar Inc.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
Financial strength rank: 3/10
Profitability rank: 3/10
Growth rank: 4/10
GF Value rank: 9/10
Momentum rank: 5/10
Based on the above method, GuruFocus assigned Globalstar Inc the GF Score of 65 out of 100, which signals poor future outperformance potential.
Globalstar Inc: A Snapshot
Globalstar Inc is a telecommunications company with a market cap of $2.34 billion. The company generates revenue from the provision of mobile satellite services, typically used by customers where existing terrestrial wireline and wireless communications networks are impaired or do not exist. The company provides two-way voice and data transmission services, as well as one-way data transmission, using mobile or fixed devices. With sales of $192.65 million and an operating margin of -10.46%, the company generates the vast majority of its revenue within the United States.
Financial Strength Analysis
Globalstar Inc's financial strength indicators present some concerning insights about the company's balance sheet health. The company's interest coverage ratio of 0 positions it worse than 0% of 301 companies in the Telecommunication Services industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. The company's Altman Z-Score is just -1.25, which is below the distress zone of 1.81. This suggests that the company may face financial distress over the next few years. Additionally, the company's low cash-to-debt ratio at 0.18 indicates a struggle in handling existing debt levels. Furthermore, the company's debt-to-Ebitda ratio is 5.23, which is above Joel Tillinghast's warning level of 4 and is worse than 80.76% of 317 companies in the Telecommunication Services industry.
Profitability Analysis
Globalstar Inc's low Profitability rank can also raise warning signals. The company's Gross Margin has also declined over the past five years, as evidenced by the data: 2018: 59.97; 2019: 59.28; 2020: 62.11; 2021: 58.19; 2022: 56.22. This trend underscores the company's struggles to convert its revenue into profits.
Growth Prospects
A lack of significant growth is another area where Globalstar Inc seems to falter, as evidenced by the company's low Growth rank. Lastly, Globalstar Inc predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Conclusion
Given the company's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. While Globalstar Inc has a history of strong performance, the current metrics suggest that it may struggle to maintain this trend. Investors should consider these factors when making investment decisions. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen.
This article first appeared on GuruFocus.
