OMCL is a contracting, lower-quality, low-risk Electronic Computers company. Revenue is contracting with no margin improvement — the thesis depends on a catalyst to reverse the trajectory. Low returns on capital (2.1%) suggest the company lacks pricing power or faces structural headwinds. However, the composite health score of 19/100 signals fundamental weakness across multiple dimensions. The company ranks in the bottom quartile of its sector (5th percentile), suggesting better alternatives exist within Technology. In technology, product cycle timing and TAM expansion define the asymmetry of outcomes — the risk profile is elevated — multiple headwinds require careful monitoring.
Why this works
The bull case exists but is not the primary narrative for this stock right now.
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Sector: Technology | Industry: Electronic Computers
Final Verdict: ▼ SELL (Conviction Score: 0/100)
OMCL competes in the technology sector — an industry defined by rapid innovation cycles, winner-take-most dynamics, and high R&D intensity. The pace of AI adoption, cloud migration, and enterprise digital transformation continues to reshape competitive moats. Companies that fail to invest in next-generation platforms risk commoditization, while those that lead tend to earn outsized returns on capital.
OMCL is currently positioned as a contracting, lower-quality asset. At $2.0B in TTM revenue, the company faces revenue headwinds (-19.0% CAGR). Margins remain relatively stable (-1.3pp operating margin).
Quarterly Momentum:
Composite Scorecard:
| Dimension | Score | Assessment |
|---|---|---|
| Overall Health | 19/100 | Weak |
| Quality Focus | 5/100 | Low |
| Safety | 5/100 | Risky |
| Durability | 33/100 | Fragile |
| Shareholder Value | 5/100 | Poor |
OMCL's growth profile faces challenges:
Revenue Growth: The company is maintaining a modest -19.0% CAGR, with TTM revenue reaching $2.0B.
Margin Expansion: Margins remain stable. Operating margins have contracted by 1.3pp to the current level, while Gross Margins declined by 3.0pp. Five-year margin expansion: -6.5pp.
Cash Flow Generation: The company generated $215M in Free Cash Flow, resulting in a moderate FCF margin of 6.0%. FCF CAGR (5Y): -2.1%.
Earnings quality analysis — the discipline of separating sustainable cash-backed profits from accounting-driven earnings — is critical for long-term investment conviction. The "Quality" profile of OMCL is solid:
Earnings Quality: Rated as Excellent (cash > earnings), with an Operating Cash Flow to Net Income ratio of 517.5%. This indicates that earnings are backed by hard cash rather than accounting maneuvers.
Value Creation: While ROIC has seen a recent decline of 2.1% (Δ-0.8pp), the company is destroying shareholder value. 5-year average ROIC: 1.7%. vs. sector median: -6.5pp.
Accounting Integrity (Beneish M-Score): The M-Score of -3.04 indicates a very low risk of earnings manipulation.
Piotroski F-Score: 4/9 — Moderate financial health.
R&D Investment: The company invests 7.7% of revenue in R&D, showing meaningful investment in future growth.
Solvency: The company is maintaining stable leverage. Debt-to-Equity stands at 0.00x, which is quite conservative
Liquidity: Current ratio of 1.44x indicates adequate liquidity.
Bankruptcy Risk: The Altman Z-Score stands at 3.46. The company is in the 'Safe Zone' with minimal distress risk.
Refinancing Risk: Rated as Low (25/100). Given its financial position, the company is well-shielded from interest rate spikes.
Fundamental Beta: 1.13 (above-market, P73). Slightly above-market systematic risk suggests the company will amplify broad market moves modestly.
Technology companies are growth-duration assets — their macro sensitivity runs primarily through discount rates and corporate capex budgets. Rising rates compress multiples while decelerating corporate spending reduces billings growth. OMCL exhibits a moderate sensitivity profile:
No macro sensitivity data available for this ticker.
Shareholder Returns: OMCL currently returns 43% of FCF to shareholders via dividends (0%) and buybacks (43%). The company balances reinvestment with shareholder returns — a prudent allocation strategy for companies in the growth-to-maturity transition. (Stock-Based Compensation: 3.6% of revenue)
Share Count: Relatively stable with +0.8% change.
Within the Technology sector (Electronic Computers), OMCL ranks as follows:
Competitive Assessment: OMCL trails sector peers on key metrics, which may indicate structural competitive disadvantage, cyclical headwinds, or a transitional period. Investors should consider whether the company has credible catalysts to close the performance gap.
| Metric | Status | Rating |
|---|---|---|
| Growth | -19.0% CAGR | Declining |
| Quality | OCF/NI 518% | Elite |
| Risk | Z-Score 3.46 | Safe |
| Regime Fit | Unknown | Adequate |
| Composite Health | 19/100 | Weak |
| Sector Rank | 5th percentile | Bottom Quartile |
Synthesis: OMCL's fundamental profile within Technology (5th percentile) raises material concerns. A weak composite health score (19/100) signals broad-based deterioration. The risk count (5) exceeds strengths (2), and the current trajectory does not support conviction. Position sizing should reflect the elevated downside risk.
Verdict: ▼ SELL
Conviction Score: 0/100
Recommended Action: Exit position. Multiple structural risks outweigh potential upside.
Conviction Drivers: Positive: +EarningsQuality, +ZScore, +LowLeverage | Negative: -Quality, -Safety, -CapEff, -DecliningRevenue, -FFQuality, -SectorLaggard, -CashBurn (anchored to Health: 19/100)
OMCL is a contracting, lower-quality, low-risk Electronic Computers company. Revenue is contracting with no margin improvement — the thesis depends on a catalyst to reverse the trajectory. Low returns on capital (2.1%) suggest the company lacks pricing power or faces structural headwinds. However, the composite health score of 19/100 signals fundamental weakness across multiple dimensions. The company ranks in the bottom quartile of its sector (5th percentile), suggesting better alternatives exist within Technology. In technology, product cycle timing and TAM expansion define the asymmetry of outcomes — the risk profile is elevated — multiple headwinds require careful monitoring.
This investment memo for OMCL (Technology — Electronic Computers) was generated using quantitative analysis of 20 quarterly SEC filings spanning 2020-12 to 2025-09. Models applied: Beneish M-Score, Piotroski F-Score, Altman Z-Score, Fama-French factor analysis, composite health scoring (v2.1), macro regime sensitivity, insider activity analysis, and labor efficiency metrics. Latest filing: 2025-09-30. All data sourced from SEC EDGAR XBRL filings.
Institutional, 13F Holdings & Large Shareholder Filings
| Fund | Shares | Value |
|---|---|---|
| Vanguard Group | 5.6M | $251.6B |
| Renaissance Technologies | 327K | $14.8B |
Bankruptcy risk — annual evolution
Earnings manipulation — annual evolution
| Company | Health | Growth | |
|---|---|---|---|
OMCL Current | 19 | — | |
AAPL Apple Inc. | 63 | 52.9% | |
SMCI Super Micro Computer, Inc. | 37 | 152.8% | |
DELL Dell Technologies Inc. | 34 | -9.3% |