Who the Heck Is Evolv Technologies?

Wall Street

Evolve Technologies (EVLV)  is a Waltham, Massachusetts-based, security-focused, small-cap technology company. 

Evolv is currently developing AI-enhanced weapons detection capabilities meant to create safer experiences for crowds in venues such as sports arenas, schools, hospitals and office buildings. The firm's solutions combine proprietary software as well as hardware to be delivered as part of a subscription model. This stock was brought to my attention by a reader. There are others. If I haven't gotten to your stock yet, I am chopping wood as quickly as I can.

Evolve offers clientele two core products. The flagship product, Evolve eXpedite, efficiently screens large numbers of individuals and their bags to detect concealed weapons such as firearms, explosives and even knives. This product is able to distinguish these kinds of weapons from items such as cell phones and keychains. The firm also offers clients a software analytics dashboard known as Evolv Insights.

Earnings

On March 10, Evolv released the firm's fiscal fourth quarter results. For the period, Evolv posted an adjusted EPS of -$0.03 on revenue of $38.5 million. The revenue print was not only a beat, but good for year-over-year growth of 56%. The firm is expected to post its Q1 results in mid-May. Expectations are for an adjusted EPS of -$0.02 on revenue of $43.7 million, which would work out to annual growth of nearly 37%.

Fundamentals

Over the trailing 12 months, Evolv generated operating cash flow of $18.7 million. Out of that came capex spending of $31.4 million, leaving "free" cash flow of -$12.7 million. That works out to about $0.11 per share.

Glancing over at the balance sheet, the firm has a cash position of $69 million and inventories of $9.3 million placing current assets at $151.3 million. Current liabilities add up to $123 million. 

Importantly, there is no short-term debt on the books and $74.9 million of those current liabilities is labeled as unearned revenue (not a true financial obligation). The firm's headline current ratio stands at a healthy enough 1.23. Once adjusted for unearned revenues, that ratio rises to a quite muscular 3.15.

Total assets amount to $304.4 million of which very little is of the intangible kind. Total liabilities less equity comes to $185 million. This does include $28.6 milllion in long-term debt, which the firm could take care of out of pocket if need be. This also includes another $16.7 million in unearned revenue. This is a very strong balance sheet for a small company, or really for any company.

Wall Street

By my count five sell-side analysts hold a public opinion on EVLV. All five are rated at either four stars or five stars out of five by TipRanks. All five have "buy" or buy-equivalent ratings on the stock. One of these five analysts has not set a target price. 

The average target of the other four is $9.63 with a high of $10 (Eric Martinuzzi of Lake Street — five stars) and a low of $9 (Brett Knoblauch of Cantor Fitzgerald — five stars).

The Chart​

Readers will see that EVLV ​rebounded nicely out of a double-bottom pattern of bullish reversal in early March after those earnings were reported. The stock has taken back its 21-day EMA and 50-day EMA while developing an ascending-triangle pattern of bullish continuation. The current pivot for that pattern is $6.20.

The more important line will likely be the 200-day SMA, standing at the moment up at $6.70. Relative strength is robust without being technically overbought. Below the chart, the daily MACD looks very bullish for the short- to medium-term. The histogram of the nine-day EMA is in positive territory as are the 12-day and 26-day EMAs. Making the signal even stronger, the 12-day line is running above the 26-day line. The portfolio has no problem initiating this name.

Tuesday's Intention

Purchase 50 shares of EVLV at or close to the last sale of $5.97. This is the first leg of what could potentially be a larger position.

Monday's Intention vs Monday's Actual Trade

-Intention: Sell 25 shares of  (SIDU)  at $3.10 or better leaving a long position of 75 shares.

-Actual Trade: Sold 25 shares of SIDU at $3.37

Current Positions

Long 150 shares of  (SOFI)  at $15.988. Last sale: $16.09.

Long 125 shares of  (OCUL)  at $8.061. Last sale: $8.06.

Long 125 shares of  (ONDS)  at $9.4749. Last sale: $9.39. 

Long 7 shares of  (PLTR)  at $149.25. Last sale: $147.58.

Long 15 shares of  (RKLB)  at $67.1653. Last sale: $65.51.

Long 50 shares of (INFQ) at $9.965. Last sale $10.21.

Long 75 shares of SIDU at $2.029. Last sale: $3.70. 

Short 1 SOFI May 15 $18.00 call at $1.01. Last sale: $0.69.

Short 1 ONDS May 8 $10.50 call at $0.60. Last sale: $0.59.

Cash: $2,900.72

Portfolio Value: $10,155.80, +1.6% from inception. 

Related: Why I'm Fading a 'Ceasefire Rally' as Trump's Iran Deadline Approaches

At the time of publication, Guilfoyle was long SOFI, OCUL, ONDS, PLTR, RKLB, INFQ and SIDU.