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This Tech Company Has Returned Over 220% In 2021. Is The Rally Over?

by | Nov 10, 2021 | Stock Picks

Paltalk Inc. (PALT) Company Overview & Stock Price Forecast

This article provides a brief analysis and stock rating for Paltalk (PALT) including an updated stock price target. Additional data on the company’s earnings yield, price/earnings ratio, return on invested capital and YTD performance are discussed as well.

Paltalk Fundamentals

PALT Stock Rating

Stock Price Target: $13.57

In the section below, we discuss the earnings yield, P/E, return on invested capital and YTD performance for Paltalk in comparison to the Software industry and the S&P 500.

Paltalk is a Micro Cap company with a Market Cap of $49.46M.

How are investors using Paltalk’s earnings yield to assess the company?

Paltalk (PALT stock)_ Earnings Yield in Comparison to the Software Industry, S&P 500 and 10 Year Treasury Rate

The earnings yield is used to show the percentage of a company’s earnings per share. Investors typically use earnings yield to determine which assets are underpriced or overpriced relative to other variables, like sector, industry or bond yields. Simply put, the earnings yield of a company can be used to assess how expensive a company is in relation to the earnings that are generated. When valuing companies, the SIS Research Group does not utilize the inverse P/E ratio to calculate the earnings yield. Instead, we use an adjusted earning yield calculation to capture variation amongst companies (i.e. debt and tax rates).

The current earnings yield for Paltalk is 38.61%%, in comparison to 3.43% for the S&P 500 and 1.56% for the 10-year treasury bond. The median earnings yield for the Software industry is 2.41%.

What does Paltalk Price-to-Earnings Ratio (P/E) tell investors about the company?

Paltalk (PALT stock)_ Price-to-Earnings, Price-to-Sales and Price-to-Book Value in Comparison to the Software Industry and the S&P 500

The price-to-earnings ratio (P/E) is a relatively popular metric used by investors and analysts for valuing a company’s stock. The P/E ratio can be used to show how a stock’s valuation compares to other companies and the total market. Investors use the P/E ratio to determine what the market is willing to pay today based on a company’s past or future earnings. A high P/E ratio could mean that a stock’s price is too high relative to earnings, which could be a signal that a stock is currently overvalued. In turn, a low P/E ratio could indicate that a company’s current stock price is low relative to earnings. 

Paltalk is currently trading at a P/E of 11.08. The P/E for the Software industry is 31.16 and the P/E for the S&P 500 is 29.17.

What is the current Price-to-Sales Ratio (P/S) for Paltalk?

The Price-to-Sales Ratio (P/S) looks at a company’s market cap and revenue to determine valuation. The P/S ratio is calculated by taking a company’s market cap and dividing by the total sales or revenue. The P/S ratio gives an idea of how much the market values every dollar of a company’s sales and can be effective in valuing unprofitable growth stocks or companies that are currently undergoing special situations or challenges. A lower the P/S ratio can be an indicator of good value.

Paltalk is currently trading at a P/S of 2.59. The P/S for the Software industry is 11.40 and the P/S for the S&P 500 is 3.17.

How does Paltalk Price-to-BookRatio (P/B) compare to the Software industry?

Price-to-book value (P/B) is the ratio of the market value of a company’s shares divided by its book value of equity (the value of it’s assets on the books). The book value is the difference between the book value of assets and liabilities. Typically, investors use the P/B ratio to assess if a stock is valued properly (a value of one means that the stock price is trading in line with the book value of the company). A company with a high P/B ratio could mean the stock price is overvalued as well as the converse.

Paltalk P/B ratio is 3.39. The P/B for the Software industry is 14.07 and the P/B for the S&P 500 is 4.93.

How attractive is Paltalk Return on Invested Capital (ROIC) to investors?

Paltalk (PALT)_ Return on Invested Capital in Comparison to the Software Industry and the S&P 500

Investors use the return on invested capital (ROIC) to assess how efficient a company is at turning capital into profits. The ROIC is the amount of money a company makes on it’s investments that is above the average cost of debt and equity.

Investors can use the ROIC to provide context for metrics like the (P/E) ratio. For instance, when used in isolation a low P/E ratio could suggest a company is oversold but the decline could be because a company is no longer generating value for shareholders. Conversely, companies that consistently generate high rates of ROIC can plausibly trade at a premium compared to other stocks, even if their P/E ratios are high.

Paltalk ROIC is currently 29.99% in comparison to 22.28% for the Software industry and 8.60% for the S&P 500.

What is Paltalk YTD Performance in comparison to its industry and the total market?

The year-to-date (YTD) performance is the amount of profit/loss realized by a stock since the first trading day of the current calendar year. 

The YTD performance for Paltalk is 241.10%. The Software industry has a YTD performance of 1.03% in comparison to the YTD S&P 500 performance of 25.01%.

Paltalk (PALT)_ YTD Performance in Comparison to the Software Industry and the S&P 500

Recent Financial Results

  • Revenue increased 2% to $3.4M
  • Advertising revenue increased 75% to $0.2M
  • Adjusted EBITDA reported of $0.3M
  • Net loss decreased by $1.2M to $0.4M
  • Operating cash flow reported positive by $0.5M
  • Investing cash flow positive of $0.5M from sale of digital tokens 
  • Completed uplist of common stock to The Nasdaq Capital Market 

Stock Price Target: $13.57

Company Overview

PALT Stock Rating

Paltalk operates as a communications software provider that develops multimedia applications and secure communication solutions worldwide. The company offers consumer applications, which include Paltalk, Camfrog, and Tinychat for live video chat and Vumber, a telecommunications application that enables users to have multiple phone numbers in any area code through which calls can be forwarded to a user’s existing cell phone or land line telephone number. Paltalk also provides technology development and professional services.

The company was formerly known as PeerStream, Inc. and changed its name to Paltalk, Inc. in May 2020. Paltalk is based in Jericho, New York and the current CEO is Jason Katz.

Be sure to add Paltalk (PALT stock) to your Watch List and if you haven’t done so already, check in on the performance of our Current Portfolio. Keep it simple and always do your due diligence.

This material is provided for informational purposes only and is not financial advice. The information contained herein should not solely be used for the formation of an investment decision, whether you are a long term or short term investor.