Ooma Inc. Common Stock (OOMA)

FairStock Score: 39/100 — MIXED

Key Financials

Strengths

• Generates $32 million in annual free cash flow (7.4% yield on market cap)

Concerns

• Trades significantly above Graham Number ($4) with negative 279% margin of safety—limited downside protection
• Altman Z-Score of 1.5 places it in the financial distress zone—elevated bankruptcy risk

AI Analysis

Ooma Inc. Common Stock is a micro-cap technology company valued at $436 million. The business generates $274 million in annual revenue with a 1.4% net margin and $32 million in free cash flow. From a quality standpoint, Ooma shows distressed Altman Z-Score of 1.5 warrants caution and modest 7% ROE. On valuation, the stock is commanding a steep 69.1x multiple, with trades far above its Graham Number ($4) with no margin of safety. Growth dynamics show revenue growing at 14.6% and profit growth of 1614.2%. Our composite FairStock Score of 39/100 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 $32 million in annual free cash flow (7.4% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

At 69x 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