HealthStream Inc. Common Stock (HSTM)

FairStock Score: 33/100 — RISKY

Key Financials

Strengths

• Generates $47 million in annual free cash flow (7.6% yield on market cap)
• Conservative balance sheet with debt-to-equity of just 0.05, providing financial flexibility

Concerns

• Trades significantly above Graham Number ($13) with negative 64% margin of safety—limited downside protection

AI Analysis

HealthStream Inc. Common Stock is a micro-cap healthcare company valued at $615 million. The business generates $304 million in annual revenue with a 0.8% net margin and $47 million in free cash flow. From a quality standpoint, HealthStream shows solid Piotroski F-Score of 6/9 and Altman Z-Score of 2.7 in the grey zone. On valuation, the stock is trading at a premium 34.3x earnings, with trades above its Graham Number with a negative 64% margin. Growth dynamics show revenue growing at 7.4% and profit growth of -48.2%. Our composite FairStock Score of 33/100 reflects below-average fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Improving fundamentals and sector tailwinds could drive meaningful earnings growth, compressing the effective multiple for patient investors. With $47 million in annual free cash flow (7.6% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

At 34x earnings, any growth disappointment triggers rapid multiple compression—a 20% earnings miss plus multiple contraction to 20x implies 40%+ downside. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer