Long-established in the Software industry, PAR Technology Corp (PAR, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 3.68%, juxtaposed with a three-month change of 21.65%. 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 PAR Technology Corp.
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: 4/10
- Profitability rank: 3/10
- Growth rank: 2/10
- GF Value rank: 7/10
- Momentum rank: 9/10
Based on the above method, GuruFocus assigned PAR Technology Corp the GF Score of 64 out of 100, which signals poor future outperformance potential.
Snapshot of PAR Technology Corp's Business
With a market cap of $1.1 billion and sales of $391.4 million, PAR Technology Corp is a key player in the software industry. The company, which has an operating margin of -18.66%, provides management technology solutions including software, hardware, and related services, integral to the point-of-sale infrastructure and task management, information gathering, assimilation, and communication services. It operates in two segments: Restaurant/ Retail and Government. The majority of its revenues are derived from the Restaurant/ Retail segment.
Financial Strength Analysis
PAR Technology Corp's financial strength indicators present some concerning insights about the company's balance sheet health. The company has an interest coverage ratio of 0, which positions it worse than 0% of 1579 companies in the Software industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. The company's Altman Z-Scoreis just 1.32, 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 0.22 indicates a struggle in handling existing debt levels.
Profitability Analysis
PAR Technology Corp's low Profitability rank can also raise warning signals. The company's Operating Margin has declined over the past five years ((-122,179.00%)), as shown by the following data: 2018: -5.33; 2019: -7.58; 2020: -12.76; 2021: -20.60; 2022: -17.55; .
Growth Prospects
A lack of significant growth is another area where PAR Technology Corp seems to falter, as evidenced by the company's low Growth rank. Lastly, PAR Technology Corp 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 PAR Technology Corp has a strong reputation in the software industry, its financial indicators suggest that it may struggle to maintain its historical performance. Therefore, investors should exercise caution when considering this stock.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
