DRMA

We rate Dermata Therapeutics, Inc. (DRMA) as Avoid with a composite score of 34.8/100 at a current price of $1.18. The stock falls in the bottom quintile of our universe across key quantitative factors, and the multi-factor weakness suggests a high probability of continued underperformance.

The rating is primarily driven by strength in momentum (42th percentile) and stability (31th percentile), which together account for the majority of the composite score. Offsetting weakness in value (23th percentile) and investment (25th percentile) tempers our overall conviction. We assign a No Moat rating (23/100), Medium uncertainty, and Poor capital allocation.

Key items to watch: valuation compression risk if growth disappoints. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Dermata Therapeutics, Inc. holds a top-quartile position (#0 of 50) within the Manufacturing sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 34.8/100 places it at rank #4137 in our full 7,333-stock universe. At $3M in market capitalization, Dermata Therapeutics, Inc. is a small-cap player in the Manufacturing space, which limits certain scale advantages but may allow for more agile strategic execution.

Momentum indicators (42th percentile) are neutral regarding the near-term price trend. Revenue growth data is unavailable, limiting our ability to confirm whether momentum is fundamentally supported.

Margin data is not available for Dermata Therapeutics, Inc., which limits our assessment of the company's cost structure and operating efficiency. We rely on factor-based signals to infer business quality in the absence of detailed margin data.

At a current price of $1.18, Dermata Therapeutics, Inc. is trading at a premium to fundamental value. Our value factor score of 23/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The premium valuation implies the market is pricing in significant future growth or quality improvements that are not yet fully reflected in current fundamentals.

The stock currently trades at P/B of 1.0x. We evaluate these multiples in the context of both absolute levels and sector-relative positioning to form our valuation view.

We assign a Medium uncertainty rating to Dermata Therapeutics, Inc.. The stock presents a balanced risk profile: below-average price stability (31th percentile) and weak quality scores (28th percentile). While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: below-average price stability (31th percentile); weak quality scores (28th percentile); low beta of -3.65 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 31th percentile and quality factor at the 28th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: conservative leverage (28% D/E) limits balance sheet risk. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate Dermata Therapeutics, Inc.'s capital allocation as Poor. Key concerns include low returns on equity (-224.0%), weak asset returns (ROA -174.9%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — Dermata Therapeutics, Inc. significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, Dermata Therapeutics, Inc. receives a Avoid rating with a composite score of 34.8/100 (rank #4137 of 7,333). Our quantitative framework assigns a No Moat (23/100, trend: stable), Medium uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 30/100.

Our analysis does not support a constructive view on Dermata Therapeutics, Inc. at this time. The combination of limited competitive advantages, medium uncertainty, and poor capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.