CreditRiskMonitor.com, Inc. (CRMZ) research, news, and more from GeoInvesting

Company description

Thu, 12 Jan 2023 13:51:24 GMT

CreditRiskMonitor.com, Inc. provides interactive business-to-business software-as-a-service subscription products for corporate credit and procurement professionals worldwide. It publishes commercial credit reports of public and private companies, which features the analysis of financial statements, including ratio analysis and trend reports, peer analyses, FRISK and PAYCE scores, and Altman Z default scores, as well as issuer ratings of Moody's Investors Service, DBRS, Inc., and Fitch Ratings. The company also provides financial data from the Federal Financial Institutions Examination Council call reports covering banks; and company background information and trade payment reports, as well as public filings, such as suits, liens, judgments, and bankruptcy information on millions of companies in the United States. In addition, it provides alerts on topics, including FRISK score changes, credit limit alerts, financial statement updates, and U.S. Securities and Exchange Commission filings and rating changes, as well as operates as a re-distributor of international credit reports. CreditRiskMonitor.com, Inc. was incorporated in 1977 and is based in Valley Cottage, New York. CreditRiskMonitor.com, Inc. operates as a subsidiary of Flum Partners.

Research

Mon, 20 Nov 2023 12:44:34 GMT

CreditRiskMonitor.com, Inc. (CRMZ) engages in the provision of interactive business-to-business software-as-a-service (Saas) subscription products for corporate credit and procurement professionals in the United States. The companyreported Q3 2023 results:

Sales of $4.79 million vs $4.54 million in the prior year
EPS of $0.04 vs $0.05 in the prior year

"Corporate bankruptcy filings continue to increase relative to last year, and within our coverage universe of FRISK® and PAYCE® scored businesses, bankruptcies are almost2.5 times greater year-to-date in 2023 versus 2022. In the same year-to-date comparison between 2023 and 2020, bankruptcies are 1.7 times greater in 2023, without a pandemic shutdown or significant bear market stressors like what occurred in 2020. We continue to monitor the zombie company contagion in markets with massive corporate debt maturities starting to come due in 2024. With the ‘higher for longer' rate environment taking root in society and increasing geopolitical tensions, a sustained increase in corporate bankruptcies of highly leveraged businesses seems more probable.

Research

Fri, 12 May 2023 04:00:00 GMT

CreditRiskMonitor.com, Inc. (CRMZ) ($2.85; $30.5M market cap) engages in the provision of interactive business-to-business software-as-a-service (Saas) subscription products for corporate credit and procurement professionals in the United States. The company reported Q1 2023 results:

Sales of $4.59 million vs $4.34 million in the prior year
EPS of $0.03 vs $0.01 in the prior year

"In Q1 2023, our performance reflects increased recessionary concern in the economy among B2B risk professionals. Corporate bankruptcies have surged as compared to the record lows of the past two years, highlighting that the most effective strategy for focusing corporate risk teams on alternative solutions is experiencing bankruptcy. More prospect and client conversations are centered around the recent failures of some of our competitors' credit risk models to identify a counterparty's financial distress before a bankruptcy filing. Many of these models are driven by sparse and stale payment data mixed with generalized firmographic data. Using such error-prone models creates a false sense of security around counterparty creditworthiness only to be exposed in periods of high volatility.

Reasons For Tracking

Thu, 12 Jan 2023 15:58:38 GMT

We are adding CreditRiskMonitor.com, Inc. (CRMZ) ($2.85; $30.5M market cap) to our Recession Resistant Model Portfolio. The company provides interactive business-to-business software-as-a-service subscription products for corporate credit and procurement professionals worldwide.

We have yet to determine if the stock is a timely selection in terms of earnings per share growth and share price appreciation potential.

Company has been around for a long time (1977) with slow and steady growth as a public company.

CRMZ has been operating at break-even to small profits over the past decade, until 2021 when the company reported non-GAAP EPS of $0.17. Thus far for 2022, at 9-months ended Sept. 2022, the company has reported non-GAAP EPS of $0.08.
Comments from last quarter indicate the company may be able to capitalize on some near term growth opportunities, at least for as long as recession and bankruptcy risk levels remain elevated:

“These aggressive interest rate hikes by central banks globally coupled with the large population of zombie companies that have approaching debt maturity walls set the stage for a potentially major swath of bankruptcies rolling in over the next 24-36 months.

The mounting recessionary pressures of the current inflationary-come-rising-interest-rate environment have put solutions that address counterparty financial risk squarely in the ‘must-have' category for all sophisticated operators.These aggressive interest rate hikes by central banks globally coupled with the large population of zombie companies that have approaching debt maturity walls set the stage for a potentially major swath of bankruptcies rolling in over the next 24-36 months. Such environments have traditionally advanced our business and I think we are well-positioned to reap additional value for our shareholders, subscribers, employees, and partners during this period and beyond.”

New product is a subscription based product, adding a recurring revenue element to the business:

“We continue to be pleased with the launch of SupplyChainMonitor™ as our go-to-market strategy is starting to get some traction. The response from subscribers and prospects on this new supply chain-focused platform has been very encouraging, validating our design decisions and agile development approach.”

Gross margins are decent at 62%, however we are curious to see if the new subscription-based product increases gross margins once those revenues begin to escalate. We do need to confirm the particular line item of “Data and product costs” to determine if that is the true cost of goods.
Strong balance sheet with $13.6 million in cash and no long term debt.

Valuation:

Shares seem to be close to fairly valued on a P/E basis, with trailing EPS of $0.17. A P/E multiple of 20 would equate to a share price of $3.40, or roughly 20% higher than current prices. However, given the new recurring revenue stream, coupled with the potential near term growth opportunities, earnings and multiples could increase if the company delivers. We’ll attempt to set up a call with management.