Shareholders of Byrna would probably like to forget the past six months even happened. The stock dropped 66.9% and now trades at $6.29. This was partly due to its softer quarterly results and may have investors wondering how to approach the situation.
Is there a buying opportunity in Byrna, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it’s free.
Why Is Byrna Not Exciting?
Even though the stock has become cheaper, we don’t have much confidence in Byrna. Here are three reasons you should be careful with BYRN, plus one stock we’d rather own.
1. Cash Burn Ignites Concerns
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
Byrna’s demanding reinvestments have drained its resources over the last five years, putting it in a pinch and limiting its ability to return capital to investors. Its free cash flow margin averaged negative 5.5%, meaning it lit $5.47 of cash on fire for every $100 in revenue.
2. Previous Growth Initiatives Have Lost Money
Growth gives us insight into a company’s long-term potential, but how capital-efficient was that growth? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).
Byrna’s five-year average ROIC was negative 3.1%, meaning management lost money while trying to expand the business. Its returns were among the worst in the industrials sector.
3. Short Cash Runway Exposes Shareholders to Potential Dilution
As long-term investors, the risk we care about most is the permanent loss of capital, which can happen when a company goes bankrupt or raises money from a disadvantaged position. This is separate from short-term stock price volatility, something we are much less bothered by.
Byrna burned through $7.82 million of cash over the last year. With $9.61 million of cash on its balance sheet, the company has around 15 months of runway left (assuming its $2.17 million of debt isn’t due right away).
Unless the Byrna’s fundamentals change quickly, it might find itself in a position where it must raise capital from investors to continue operating. Whether that would be favorable is unclear because dilution is a headwind for shareholder returns.
We remain cautious of Byrna until it generates consistent free cash flow or any of its announced financing plans materialize on its balance sheet.
Final Judgment
Byrna’s business quality ultimately falls short of our standards. Following the recent decline, the stock trades at 25.6× forward EV-to-EBITDA (or $6.29 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. We’re pretty confident there are more exciting stocks to buy at the moment. Let us point you toward our favorite semiconductor picks and shovels play.
Stocks We Like More Than Byrna
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Stocks that have made our list include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
