JFrog Ltd (FROG) Stock Analysis
JFrog Ltd (FROG) Stock Analysis
Overall Grade: F (Concerning)
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JFrog Ltd faces challenges in financial performance that warrant careful analysis.
Key Metrics:
| Metric | Value | Context |
|---|---|---|
| ROIC | -12.0% | Below expectations |
| FCF Margin | 26.8% | Strong cash generation |
| Debt/Equity | 0.0x | Conservative leverage |
Investment Thesis: Healthy free cash flow margin of 26.8% provides financial flexibility for growth and shareholder returns.
What is JFrog Ltd's Profitability and ROIC?
JFrog Ltd's return on invested capital of -12.0% is below the typical cost of capital. Gross margin of 76.8% with operating margin at -17.3% reflects the company's strong market position.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Return on Invested Capital (ROIC) | -12.0% | Red flag | Below cost of capital |
| Return on Equity (ROE) | -8.7% | Red flag | Moderate equity returns |
| Gross Margin | 76.8% | Excellent | Strong pricing power |
| Operating Margin | -17.3% | Warning | Moderate operational efficiency |
How Strong is JFrog Ltd's Cash Flow Quality?
JFrog Ltd generated $142.3M in free cash flow over the trailing twelve months, representing a 26.8% margin. FCF was positive in N/A of the last 8 quarters, indicating variable cash generation.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Free Cash Flow Margin | 26.8% | Excellent | Excellent cash conversion |
| Free Cash Flow (TTM) | $142.3M | Good | Positive cash generation |
| OCF/Net Income | -2.0x | Warning | Potential accrual concerns |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
What is JFrog Ltd's Financial Health?
JFrog Ltd'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 JFrog Ltd Stock Overvalued or Undervalued?
JFrog Ltd trades at a P/E of -100.7x, representing a premium to the sector median of N/A. Free cash flow yield of 2.0% reflects market expectations for growth.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| P/E Ratio | -100.7x | Red flag | Reasonable valuation |
| EV/Sales | 12.5x | Warning | Growth premium priced in |
| FCF Yield | 2.0% | Warning | Lower cash yield |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | -12.0% | Top 25% | -1.8x below |
| Free Cash Flow Margin | 26.8% | Top 25% | 2.7x above |
| Gross Margin | 76.8% | Top 25% | 1.5x above |
| Operating Margin | -17.3% | Top 5% | -2.7x below |
| Return on Equity (ROE) | -8.7% | Bottom 50% | -1.4x below |
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: -12.0% (Red flag - Top 25% of sector (median: 6.5%))
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: 26.8% (Excellent - Top 25% of sector (median: 10.0%))
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: 76.8% (Excellent - Top 25% of sector (median: 52.9%))
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)
Free Cash Flow Yield
Free cash flow per share divided by stock price. Higher FCF yield indicates better cash return relative to valuation.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 8% | High cash return, potential value opportunity |
| Good | 5% - 8% | Solid cash yield |
| Adequate | 3% - 5% | Moderate cash return |
| Warning | 1% - 3% | Low cash yield, growth expectations |
| Red flag | < 1% | Minimal cash return to shareholders |
Current: 2.0% (Warning)
Frequently Asked Questions
Q: What is JFrog Ltd's Return on Invested Capital (ROIC)?
JFrog Ltd (FROG) has a trailing twelve-month Return on Invested Capital (ROIC) of -12.0%. This compares below the sector median of 6.5%. An ROIC below 8% suggests the company may be destroying shareholder value.
Q: What is JFrog Ltd's Free Cash Flow Margin?
JFrog Ltd (FROG) has a free cash flow margin of 26.8%, generating $142.3 million 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 JFrog Ltd stock overvalued or undervalued?
JFrog Ltd (FROG) trades at a P/E ratio of -100.7x, which is above the sector median of N/A. The EV/Sales multiple is 12.5x. Free cash flow yield is 2.0%, reflecting growth expectations priced into the stock.
Q: What is JFrog Ltd's revenue and earnings growth?
JFrog Ltd (FROG) grew revenue by 24.1% year-over-year. Earnings per share increased by 1.6% compared to the prior year. Double-digit revenue growth indicates strong demand and market share gains.
Q: How does JFrog Ltd compare to competitors in Technology?
Compared to other companies in Technology, JFrog Ltd (FROG) shows: ROIC of -12.0% is below the sector median of 6.5% (Top 21%). FCF margin of 26.8% exceeds the sector median of 10.0% (Top 18% of sector). Gross margin at 76.8% is 23.9 percentage points higher than sector peers. These rankings are based on MetricDuck's analysis of all Technology companies with available SEC filings.
Q: What warning signs should I watch for with JFrog Ltd?
JFrog Ltd (FROG) 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 Q4 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.