Freedom Holding Corp. (FRHC) Stock Analysis
Freedom Holding Corp. (FRHC) Stock Analysis
Overall Grade: F (Concerning)
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Freedom Holding Corp. faces challenges in financial performance that warrant careful analysis.
Key Metrics:
| Metric | Value | Context |
|---|---|---|
| ROIC | -25.0% | Below expectations |
| FCF Margin | 57.4% | Strong cash generation |
| Debt/Equity | 0.0x | Conservative leverage |
Investment Thesis: Healthy free cash flow margin of 57.4% provides financial flexibility for growth and shareholder returns.
What is Freedom Holding Corp.'s Profitability and ROIC?
Freedom Holding Corp.'s return on invested capital of -25.0% is below the typical cost of capital. Gross margin of 100.0% with operating margin at 5.2% reflects the company's strong market position.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Return on Invested Capital (ROIC) | -25.0% | Red flag | Below cost of capital |
| Return on Equity (ROE) | 6.6% | Warning | Moderate equity returns |
| Gross Margin | 100.0% | Excellent | Strong pricing power |
| Operating Margin | 5.2% | Adequate | Moderate operational efficiency |
How Strong is Freedom Holding Corp.'s Cash Flow Quality?
Freedom Holding Corp. generated $1.2B in free cash flow over the trailing twelve months, representing a 57.4% margin. Cash earnings quality is strong, with operating cash flow exceeding net income by 16.2x.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Free Cash Flow Margin | 57.4% | Excellent | Excellent cash conversion |
| Free Cash Flow (TTM) | $1.2B | Good | Positive cash generation |
| OCF/Net Income | 16.2x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
What is Freedom Holding Corp.'s Financial Health?
Freedom Holding Corp.'s debt-to-equity ratio of 0.0x indicates conservative leverage.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Debt to Equity | 0.0x | Excellent | Conservative capital structure |
Is Freedom Holding Corp. Stock Overvalued or Undervalued?
Freedom Holding Corp. trades at a P/E of 107.4x, representing a premium to the sector median of N/A.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| P/E Ratio | 107.4x | Warning | Premium valuation |
| EV/Sales | 2.6x | Good | Attractive revenue multiple |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | -25.0% | Bottom 10% | -2.7x below |
| Free Cash Flow Margin | 57.4% | Top 5% | 2.6x above |
| Gross Margin | 100.0% | Top 50% | 1.0x at |
| Operating Margin | 5.2% | Bottom 25% | 0.2x below |
| Return on Equity (ROE) | 6.6% | Bottom 25% | 0.6x below |
| P/E Ratio | 107.4x | N/A | - |
Rating Thresholds
Return on Invested Capital (ROIC)
Measures how efficiently a company uses its debt and equity capital to generate profits. ROIC above 15% typically indicates a competitive moat.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Exceptional capital efficiency, strong competitive moat |
| Good | 12% - 20% | Above-average returns, sustainable competitive position |
| Adequate | 8% - 12% | Around cost of capital, moderate competitive position |
| Warning | 4% - 8% | Below cost of capital, value may be eroding |
| Red flag | < 4% | Significant capital destruction, fundamental issues |
Current: -25.0% (Red flag)
Free Cash Flow Margin
The percentage of revenue converted to free cash flow. Higher margins indicate stronger cash generation and business quality.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Strong cash generation, high-quality business |
| Good | 10% - 20% | Healthy cash conversion |
| Adequate | 5% - 10% | Moderate cash generation |
| Warning | 0% - 5% | Thin cash margins, capital intensive |
| Red flag | < 0% | Cash burn, potential liquidity concerns |
Current: 57.4% (Excellent - Top 5% of sector (median: 22.2%))
Gross Margin
Revenue minus cost of goods sold as a percentage. Higher gross margins indicate pricing power and competitive advantage.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 50% | Strong pricing power and competitive moat |
| Good | 30% - 50% | Healthy margins, differentiated product |
| Adequate | 20% - 30% | Moderate margins, competitive industry |
| Warning | 10% - 20% | Thin margins, commodity-like business |
| Red flag | < 10% | Very thin margins, structural challenges |
Current: 100.0% (Excellent - Top 50% of sector (median: 100.0%))
Debt to Equity Ratio
Total debt divided by shareholders' equity. Lower ratios indicate more conservative financing and reduced financial risk.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | < 0.3x | Conservative leverage, strong balance sheet |
| Good | 0.3x - 0.7x | Moderate leverage, healthy financial position |
| Adequate | 0.7x - 1.5x | Elevated leverage, monitor closely |
| Warning | 1.5x - 3.0x | High leverage, increased financial risk |
| Red flag | > 3.0x | Excessive leverage, potential distress risk |
Current: 0.0% (Excellent)
P/E Ratio (Price-to-Earnings)
Stock price divided by earnings per share. Lower P/E may indicate undervaluation, while higher P/E suggests growth expectations.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | < 15x | Attractively valued, potential opportunity |
| Good | 15x - 25x | Fair value for quality company |
| Adequate | 25x - 35x | Growth premium, justify with earnings growth |
| Warning | 35x - 50x | High expectations priced in |
| Red flag | > 50x or negative | Speculative valuation or losses |
Current: 107.4x (Warning)
Frequently Asked Questions
Q: What is Freedom Holding Corp.'s Return on Invested Capital (ROIC)?
Freedom Holding Corp. (FRHC) has a trailing twelve-month Return on Invested Capital (ROIC) of -25.0%. This compares below the sector median of 9.2%. An ROIC below 8% suggests the company may be destroying shareholder value.
Q: What is Freedom Holding Corp.'s Free Cash Flow Margin?
Freedom Holding Corp. (FRHC) has a free cash flow margin of 57.4%, generating $1.2 billion in free cash flow over the trailing twelve months. A FCF margin above 20% indicates excellent cash conversion and a high-quality business model.
Q: Is Freedom Holding Corp. stock overvalued or undervalued?
Freedom Holding Corp. (FRHC) trades at a P/E ratio of 107.4x, which is above the sector median of N/A. The EV/Sales multiple is 2.6x.
Q: How does Freedom Holding Corp. compare to competitors in Financials?
Compared to other companies in Financials, Freedom Holding Corp. (FRHC) shows: ROIC of -25.0% is below the sector median of 9.2% (-2.7x median). FCF margin of 57.4% exceeds the sector median of 22.2% (Top 5% of sector). Gross margin at 100.0% is 0 percentage points lower than sector peers. These rankings are based on MetricDuck's analysis of all Financials companies with available SEC filings.
Q: What warning signs should I watch for with Freedom Holding Corp.?
Freedom Holding Corp. (FRHC) shows no major financial warning signs based on current metrics. However, investors should always monitor: 1) Margin compression trends, 2) Cash flow consistency, 3) Debt levels relative to cash generation, and 4) Changes in competitive positioning.
Data Source: Data sourced from 10-Q filed 2025-11-07. TTM metrics as of Q2 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
This analysis is for informational purposes only and does not constitute investment advice.