Analyzing Small Cap Stocks: Perfect Corp
The TDR Three Key Takeaways regarding Perfect Corp and small-cap stock:
- Avon collaboration highlights Perfect Corp’s potential in the small-cap AI sector.
- Small-cap company reports a solid $55 million in annual revenue.
- Perfect Corp’s strong financial performance with an 80.4% gross margin
Perfect Corp (NYSE: PERF), a Taiwan-based AI beauty and fashion company, is an intriguing small-cap stock in the AI market. The company provides technology that allows users to analyze their skin, try on cosmetics virtually, and test fashion accessories, the company has secured a significant partnership with Avon. This partnership resulted in a 320% increase in conversion rates and a 33% higher average order value for Avon, highlighting the effectiveness of Perfect Corp’s AI solutions.
Financially, Perfect Corp reported $55 million in revenue last year, with a year-over-year growth rate of 17.4%. Over the past three years, the growth rate was 21.4%, and over five years, it was 35.9%, indicating a strong upward trend. The company’s gross margin is 80.4%, demonstrating high profitability and efficient operations. According to the Rule of 40, which combines a company’s growth rate and profit margin, Perfect Corp scores 97.8%, nearly doubling the benchmark, reflecting excellent financial health.
Last year, Perfect Corp had a levered free cash flow of $13.2 million, up from a flat figure the previous year due to reinvestment in the business. The company also reported a net income of $5 million, demonstrating its ability to generate profit while continuing to invest in growth. The stock price is currently $2.25 per share, and an analysis of liquid assets reveals that after debt repayment, the company would have $1.34 per share in cash and liquid assets, offering substantial underlying value to investors.
Perfect Corp has a credit score of 5.7, indicating strong creditworthiness and minimal financial risk. This solid financials enhances its attractiveness to investors. The partnership with Avon is a significant growth catalyst, opening doors to additional high-profile partnerships. As more companies seek innovative solutions to increase sales and customer engagement, the company is well-positioned to capitalize on these opportunities.
Perfect Corp’s innovative technology, strong financial performance, and strategic growth initiatives make it a promising small-cap company in the AI sector. Its strong revenue growth, high gross margin, significant free cash flow, and favorable valuation offer a compelling investment opportunity. Want to be updated on all things Psychedelic, Cannabis, AI, and Crypto? Subscribe to our Daily Baked in Newsletter!
