HireRight (HRT) will next report on 5-9 and has seen unusual bullish options positioning with 2050 May $10 calls bought on 4/5 and 3000 August $10 calls bought on 4/19. HRT shares are down 38.5% over the past year and VWAP from the IPO in 2021 is up at $14.15. HireRight is a leading global provider of technology-driven workforce risk management and compliance solutions like comprehensive background screening, verification, identification, monitoring, and drug and health screening services for approximately 38,000 customers across the globe. To be able to copy & paste content to share with others please contact us at subscriptions@peimedia.com to upgrade your subscription to the appropriate license. The rapidly changing dynamics of the global workforce are creating increased complexity and regulatory scrutiny for employers, bolstering the importance of the solutions. Employment background screening is a critical, highly complex employer need. HRT has a market cap of $785M and trades cheap at 8X FY23 EBITDA, 1.8X EV/Sales and has a 12% FCF yield. Forecasts see HRT revenues down 9.3% in 2023 with EPS down 45% before recovering in 2023 and leverage a concern with Debt/EBITDA running 3X. HRT announced a $100M buyback in November. HRT is exposed to large tech firms where job cuts and lack of hiring are certain to hurt results. HRT has been seeing margin improvement with cost optimization and automation. HRT also continues to take market share in enterprise. Management also indicated trends are strong outside of Tech and Government verticals. General Atlantic owns a $380M position and Stone Point Capital at $220M position, so mainly controlled by institutions.

HRT is tricky as the stock is in an ugly trend and fundamentals of the business are facing serious headwinds but valuation is wildly cheap and margin expansion continues. Considering PE firm General Atlantic backed the IPO and continues to hold a large stake, one may conclude HRT could become a PE target and that would make a lot of sense.