Home » VerifyMe Stock: An underrated authentication tech company

VerifyMe Stock: An underrated authentication tech company

by Investoradar
scanning a QR code with phone

VerifyMe (VRME) is a company that provides comprehensive brand protection and customer engagement solutions. Its solution combines secure product authentication, track and trace, and industry-leading online retail monitoring capabilities. The number of counterfeit items had increased substantially in recent years. This is especially serious in the e-commerce sector with items like apparel, collectibles, and cosmetics as customers are not able to verify the product in person.

The company offers three main solutions which are VerifyMe Authenticate, VerifyMe Engage, and VerifyMe Track & Trace. Each solution leverages different in-house patented technology such as VerifyInk, VerifyLabel, VerifyCode, and VerifyChecker to help enhance its performance. These solutions combine to provide high security and customer engagement capabilities for companies with different needs.

VerifyInk: VerifyInk provides an invisible ink that cannot be seen or altered. The ink uses invisible pigments to print variable hidden images or item-level serialization and can be integrated into products at the point of manufacture to create authentication measures.

VerifyLabel: VerifyLabel uses VerifyInk to create QR codes and tamper-evident labels to protect products and allows companies to easily recognize counterfeit products that do not consist of the unique QR code and label.

VerifyCode: VerifyCode uses VerifyInk to generate invisible codes for each item in a shipment. The codes are serialized, scanned, and associated with dedicated case packs, pallets, and shipping containers and allow companies to track the shipment using the code.

VerifyChecker: VerifyChecker is a device that leverages all the technology above. The device ables the company to scan the label or the code to instantly see whether the product is authentic. It can also record data such as when and where the item is being scanned during transit for the company to track and trace the product.

The market for its products is really big as brands are seeking ways to easily authenticate items and eliminate the threat of rising counterfeit goods that are hurting the company’s sales and reputation. Some of the sectors that will likely be interested in adopting the product include apparel companies, pharmaceutical companies, cosmetic companies, and food and beverages companies. The solutions are also really easy to integrate and user-friendly and will not disrupt the current logistics routine of companies. VerifyMe recently partnered with Renavotio to add anti-counterfeiting, track and trace, and brand protection solutions to their Personal Protective Equipment. It received and delivered an initial purchase order for 2 million pre-printed anti-counterfeiting labels for 2 million boxes of surgical gloves. This partnership proves the attractiveness of VerifyMe’s solutions and I believe there will be more and more partnerships in the future as the market grows.

In the fourth quarter of 2021, the company reported revenues of $255 thousand compared to $75 thousand a year ago which represents a stellar 240% growth. Gross profits increased from $62 thousand a year ago to $170 thousand which almost tripled. The company posted a $0.49 diluted earnings per share compared to a $1.48 diluted loss per share a year ago. Gross margin dropped from 83% to 67% due to a shift in product mix but margins are still looking very healthy and I think a high margin can be sustained in the long term due to the nature of its business model. Their balance sheet is very $9.4 million of cash in hand and has no debt. It leveraged its strong cash position and repurchased 79,593 shares in the fourth quarter.

Analysts forecast the company to have a positive EPS (earnings per share) of $0.21 and revenue of $10 million for 2023 which represents a 10x revenue growth from 2021. At the current share price, the company is valued at a forward 23 PE of 15.3 and a forward PS ratio of 2.33. There are not many comparable companies similar to VerifyMe that are public but if compared to other stocks growing at a similar pace, VerifyMe is trading at a bargain price. The increasing TAM and strong revenue growth combined with healthy margins make the company quite compelling. It is worth noting that this is a micro-cap stock, therefore, the trading volume is quite low and the share price can be very volatile.

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