Company Overview
Alliance Entertainment Holding Corporation functions as a dedicated wholesaler and e-commerce provider serving the entertainment industry on a global scale. The company's portfolio encompasses vinyl records, video games, digital video discs, blu-rays, toys, compact discs, collectibles, and various other entertainment and consumer products. Operating within the Communication Services sector specifically under the Entertainment industry, the firm positions itself to supply inventory and products to retailers and distributors. The organization maintains a substantial workforce of 697 employees to support its extensive distribution network. With a market capitalization of $357.21M and annual revenue reaching $1.06B, the company operates as a mid-sized entity within its niche. These valuation and revenue figures indicate that while the business has established a significant revenue base, it operates with a relatively modest market valuation compared to its top-line sales, suggesting a focus on operational scale rather than speculative market hype.
Financial Health
The company reported revenue of $1.06B over the trailing twelve months, generating net income of $21.88M and an EBITDA of $47.57M during the same period. The substantial gap between the $1.06B in revenue and the $21.88M in net income reveals a cost structure where operating expenses and taxes consume a significant portion of gross sales, resulting in a thin profit layer. Free cash flow stands at $-7,181,625, indicating that the company is currently burning cash rather than generating surplus liquidity from its operations, which limits immediate financial flexibility for large-scale acquisitions or aggressive capital expansion without external financing. The gross margin sits at 14.0%, reflecting the high cost of goods sold typical in wholesale entertainment distribution. The operating margin of 4.6% and the profit margin of 2.1% further illustrate the pressure on profitability, where only a small fraction of each dollar of sales translates into operating profit and final net earnings. Total cash on hand is $1.38M, which is drastically lower than the total debt of $107.22M, highlighting a capital structure heavily reliant on leverage. This disparity is quantified by a debt-to-equity ratio of 91.19, confirming that the balance sheet is highly leveraged rather than conservative. The current ratio of 1.35 suggests that the company holds sufficient current assets to cover its short-term liabilities, though the margin is relatively tight given the high debt load. Return on Equity of 20.5% and Return on Assets of 6.3% demonstrate that management is effective at utilizing shareholder equity to generate returns, despite the significant debt burden and negative cash flow environment.
Valuation Assessment
The trailing P/E ratio is 16.30, while the forward P/E is projected to be 10.31. The significant difference between the trailing and forward P/E ratios implies that the market expects earnings to increase substantially in the future, potentially driven by cost-cutting measures or revenue recovery, although this trajectory remains dependent on future performance. The price-to-book ratio is 3.04, indicating that the stock trades at a premium of roughly three times its book value, suggesting investors are pricing in intangible assets or future growth potential beyond the tangible net asset base. Alternative valuation metrics provide a different perspective, with a price-to-sales ratio of 0.34 and an EV/EBITDA of 9.73. The low price-to-sales ratio suggests the stock is valued cheaply relative to its massive revenue base, while the EV/EBITDA of 9.73 places the company's enterprise value in a specific context relative to its cash earnings. The 52-week high is $8.80 and the 52-week low is $2.21. Without a specific current price provided in the facts to calculate a precise percentage, the trading range demonstrates a wide volatility band where the stock has fluctuated significantly over the past year. The beta value is 0.51, which indicates that the stock's price volatility is less than half that of the broader market, suggesting it behaves as a defensive or low-volatility asset within the entertainment sector.
Growth & Income
Revenue growth year-over-year is -6.3%, while earnings growth year-over-year is 29.7%. This divergence indicates that earnings are growing at a much faster rate than revenue, which often implies a company is improving its margins or reducing costs more aggressively than it is expanding its top line. The company does not pay a dividend, as evidenced by a dividend yield of N/A and a payout ratio of 0.0%. Consequently, the firm reinvests all of its earnings back into the business or uses them to manage its debt obligations rather than distributing cash to shareholders. The overall growth and income profile is characterized by a contraction in revenue paired with a sharp expansion in profitability, coupled with a complete absence of dividend distribution.