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Verdict
Quantitative factor alignment verified for current market regime.
Quant Score
Rank
#2064
Positioning
Market Dominance
Manufacturing
Pharmaceutical Products
$41M
Ted White
Verrica Pharmaceuticals Inc. develops and commercializes treatments for people with skin diseases in the United States. The company's lead product candidate includes VP-102 for the treatment of molluscum contagiosum; VP-103 for treating plantar warts.
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X-AXIS: EV/EBITDA (LOWER = CHEAPER) | Y-AXIS: ROE (HIGHER = ELITE) | RED CIRCLE = VRCA ANALYSIS TARGET
| Stock | Rating | Score▼ | Quality | Value | Momentum | P/E | EV/EBITDA | ROE | ROA | Gross Mgn | Op Mgn | Net Mgn | Rev Growth | Div Yield | D/E | Mkt Cap | AUDIT |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
$UL UNILEVER PLC | 78 | 96 | 98 | 59 | - | - | 28.5% | 8.0% | 100.0% | 100.0% | 10.4% | -4.6% | 3.3% | 0.0x | $141.8B | VS | |
$ASML ASML HOLDING NV | 77 | 89 | 86 | 83 | - | - | 46.1% | 16.6% | 51.3% | 31.9% | 26.8% | -4.0% | 1.0% | 25.0x | $272.1B | VS | |
$ESLT ELBIT SYSTEMS LTD | 76 | 81 | 87 | 85 | - | - | 10.3% | 3.1% | 24.1% | 7.2% | 4.7% | 14.3% | 0.8% | 25.0x | $11.4B | VS | |
$MT ArcelorMittal | 75 | 71 | 98 | 85 | - | - | 2.2% | 1.5% | 9.3% | 5.3% | 2.2% | -8.5% | 2.2% | 16.0x | $18.9B | VS | |
$AMAT APPLIED MATERIALS INC /DE | 75 | 85 | 87 | 84 | 20.9x | 13.6x | 35.5% | 19.8% | 48.7% | 29.2% | 24.7% | 4.4% | 0.8% | 32.0x | $181.9B | VS | |
$SIMO Silicon Motion Technology CORP | 75 | 84 | 86 | 85 | - | - | 11.8% | 8.8% | 45.9% | 11.3% | 11.1% | 25.7% | 3.7% | 0.0x | $1.8B | VS | |
$CODA Coda Octopus Group, Inc. | 74 | 83 | 90 | 79 | 16.3x | 11.9x | 7.6% | 7.0% | 66.5% | 17.1% | 15.6% | 39.0% | 0.0% | 0.0x | $115M | VS | |
$GSK GSK plc | 74 | 84 | 90 | 70 | - | - | 22.6% | 4.9% | 71.2% | 12.8% | 9.4% | 1.7% | 5.9% | 124.0x | $72.1B | VS | |
$EFXT Enerflex Ltd. | 74 | 80 | 91 | 83 | - | - | 3.0% | 1.1% | 20.9% | 7.3% | 1.3% | 3.0% | 0.9% | 67.0x | $1.2B | VS | |
$BUD Anheuser-Busch InBev SA/NV | 74 | 84 | 97 | 63 | - | - | 8.2% | 3.5% | 55.3% | 25.9% | 12.4% | 0.7% | 1.7% | 0.0x | $87.0B | VS | |
$VRCA Verrica Pharmaceuticals Inc. | 50 | 43 | 65 | 76 | - | 17.6x | 101.8% | -79.9% | 79.7% | -71.1% | -94.5% | 177.1% | 0.0% | - | $41M | ||
| SECTOR BENCH | - | - | - | - | - | 22.3x | 11.5x | -2.5% | -0.1% | 42.5% | 1.3% | -0.2% | 5.9% | 0.0% | 0.2x | - | REF |
Verrica Pharmaceuticals Inc. (VRCA) receives a "Reduce" rating with a composite score of 49.6/100. It ranks #2064 out of 7,333 stocks in our coverage universe and carries a 2-star rating. Ratings are driven by a 6-factor quantitative model measuring quality, value, momentum, investment, stability, and short interest.
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YOY expansion rate
Core pricing power
Operating efficiency
Bottom-line conversion
Equity capital efficiency
Asset base utilization
Direct cash return
Outperforming peers — winners tend to keep winning over 3-12 months
Trading at a discount to fundamentals — favorable entry valuation
Average quality profile
High volatility — wider range of outcomes increases timing risk
Aggressive spending — empire-building risk, dilutive growth
Mid-range overall rating
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Relative valuation derived from Manufacturing sector benchmarks. Model weights: EV/EBITDA (40%), P/B (35%), P/S (25%). Re-calculated daily.
No analyst ratings for VRCA.
View All RatingsHigh margin volatility — erratic forensic earnings quality
Ted White
Chief Executive Officer
Labor Force
40
43
21
31
Audit Verdict: Lower quality and stability scores may indicate governance concerns.
No recent insider transactions available for VRCA
| Factor | Global | Sector | Tilt |
|---|---|---|---|
| PROFITABILITY | 43 | 20 | +23ALPHA |
| MOMENTUM | 76 | 79 | -3NEUTRAL |
| VALUATION | 65 | 54 | +11ALPHA |
| INVESTMENT | 21 | 3 | +18ALPHA |
| STABILITY | 31 | 10 | +21ALPHA |
| SHORT INT | 46 | 42 | +4NEUTRAL |
Global = full universe. Sector = relative to industry peers. Positive tilt indicates idiosyncratic strength.
ROIC 246.2% vs WACC 9.4% (spread +236.9%)
GM 80% vs sector 43%, OM -71% vs sector 1%
Capital turnover 27.48x, R&D intensity 20.8%
Rev growth 177%, 8yr history
Interest coverage 0.8x, Net debt/EBITDA 0.3x
Composite assessment of profitability, capital efficiency, and financial strength. Top-tier entities demonstrate sustainable cash flow generation and elite competitive moats.
Profit generated per dollar of shareholder equity
Efficiency of asset utilization
Pricing power and cost efficiency
Core business profitability
Bottom-line profitability
The Quality factor evaluates the persistence and magnitude of realized cash flows. Companies with scores >70 exhibit superior pricing power and structural financial resilience through diverse economic regimes.
Our uncertainty rating tracks the predictability of future cash flows and potential for permanent capital loss. Moderate visibility with standard industry cyclicality.
Verrica Pharmaceuticals Inc. receives a Reduce rating from our analysis, with a composite score of 49.6/100 and 2 out of 5 stars, ranking #2064 out of 7,333 stocks. VRCA's factor profile shows weakness across multiple dimensions, suggesting the stock may underperform going forward. Existing holders may want to consider trimming positions or tightening stop-losses.
VRCA's quality score of 43/100 is below average, suggesting challenges with profitability or capital efficiency. The company reports a return on equity of 101.8% (sector avg: -2.5%), gross margins of 79.7% (sector avg: 42.5%), net margins of -94.5% (sector avg: -0.2%). Investors should examine whether management is actively addressing these weaknesses or if they reflect structural industry headwinds.
VRCA's value score of 65/100 indicates the stock is fairly valued based on its current fundamentals. Key valuation metrics include an EV/EBITDA of 17.55x. At this level, neither a clear bargain nor overpriced, the stock's attractiveness depends more on forward growth expectations and qualitative factors.
Verrica Pharmaceuticals Inc.'s investment score of 21/100 suggests limited reinvestment activity. Key growth metrics include revenue growth of 177.1% vs. a sector average of 5.9% and a return on assets of -79.9% (sector: -0.1%). While this can be positive for mature, cash-generative businesses returning capital to shareholders, it may also signal a lack of growth opportunities or management conservatism.
VRCA shows strong momentum characteristics with a score of 76/100. The stock has been trending above key moving averages, indicating solid demand from institutional buyers. Revenue growth stands at 177.1% year-over-year, while a beta of 0.88 reflects its sensitivity to broader market moves. This level of momentum typically signals sustained investor confidence and favorable near-term price action.
VRCA's stability score of 31/100 signals elevated volatility and/or leverage concerns. Key stability metrics include a beta of 0.88. Investors should be prepared for wider-than-average price swings and consider position sizing accordingly to manage portfolio risk.
The short interest score of 46/100 for VRCA suggests somewhat elevated bearish positioning by institutional traders. Specific risk factors include micro-cap liquidity risk. With a $41M market cap (micro-cap), Verrica Pharmaceuticals Inc. may experience above-average volatility. Investors should consider whether the short thesis has merit or if it creates a potential short-squeeze opportunity.
Verrica Pharmaceuticals Inc. is a micro-cap company in the Manufacturing sector, ranked #0 of 50 in its sector (100th percentile) and #2064 of 7,333 overall (72nd percentile). Key comparisons include ROE of 101.8% exceeding the -2.5% sector median and operating margins of -71.1% below the 1.3% sector average. This top-quartile standing reflects exceptional competitive strength relative to Manufacturing peers.
While VRCA currently exhibits a REDUCE profile, superior opportunities exist within the MANUFACTURING sector. Our model identifies several "Strong Buy" candidates with higher quality scores and more attractive valuations among direct industry competitors.
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Improvement in Investment (21) would have the largest impact on the composite score.
EV/EBITDA 53% ABOVE SECTOR MEDIAN
ROE 4206% BELOW SECTOR MEDIAN
Gross Margin 87% ABOVE SECTOR MEDIAN (FAVORABLE)
AUDIT DATA AS OF SEP 30, 2025 (Q2 FY2025)
We rate Verrica Pharmaceuticals Inc. (VRCA) as a Reduce with a composite score of 49.6/100 at a current price of $5.61. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.
The rating is primarily driven by strength in momentum (76th percentile) and value (65th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (21th percentile) and stability (31th percentile) tempers our overall conviction. We assign a Narrow Moat rating (59/100), High uncertainty, and Poor capital allocation.
Key items to watch: sustainability of the current growth rate; the path to profitability. 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.
Verrica Pharmaceuticals 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 49.6/100 places it at rank #2064 in our full 7,333-stock universe. At $41M in market capitalization, Verrica Pharmaceuticals Inc. is a small-cap player in the Manufacturing space, which limits certain scale advantages but may allow for more agile strategic execution.
The near-term outlook is constructive, with revenue growing at 177% and momentum in the 76th percentile confirming positive market sentiment and institutional accumulation. The combination of strong top-line growth and favorable price dynamics suggests the company is executing well on its growth strategy. Investment factor at the 21th percentile indicates reinvestment patterns that investors should monitor for sustainability.
The margin cascade tells an important story: gross margins of 80% (+37.2pp vs sector) narrow to operating margins of -71% (-72.4pp vs sector) and net margins of -94.5%, yielding a gross-to-net conversion rate of -119%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.
At a current price of $5.61, Verrica Pharmaceuticals Inc. is trading near fair value based on current fundamentals. Our value factor score of 65/100 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. Valuation metrics are mixed, with no strong signal of mispricing in either direction.
The stock currently trades at EV/EBITDA of 17.6x (at a premium), P/S of 3.2x. We evaluate these multiples in the context of both absolute levels and sector-relative positioning to form our valuation view.
Gross margins of 80% signal strong pricing power and brand/IP advantages — businesses with margins above 40% have historically demonstrated more resilient earnings through economic cycles.
Returns on equity of 101.8% exceed the cost of equity for most companies, indicating genuine shareholder value creation and a reinvestment engine that compounds wealth over time.
Revenue growth of 177% confirms the business is expanding its addressable market — growth at this level typically supports multiple expansion and attracts institutional capital.
A value factor score of 65/100 suggests the market is underpricing these fundamentals, creating a potential margin of safety for new investors.
Positive momentum (76th percentile) indicates institutional accumulation and favorable technical dynamics that tend to persist in the intermediate term.
We assign a High uncertainty rating to Verrica Pharmaceuticals Inc.. Key risk factors include current negative profitability (net margin -94.5%), below-average price stability (31th percentile). The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.
Specific risk factors that inform our assessment include: current negative profitability (net margin -94.5%); below-average price stability (31th percentile). 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 43th percentile provide a quantitative summary of the overall risk landscape.
Key risk mitigants include: healthy gross margins of 80% provide a buffer against cost pressures. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.
We rate Verrica Pharmaceuticals Inc.'s capital allocation as Poor. Key concerns include negative profitability, weak asset returns (ROA -79.9%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — Verrica Pharmaceuticals 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, Verrica Pharmaceuticals Inc. receives a Reduce rating with a composite score of 49.6/100 (rank #2064 of 7,333). Our quantitative framework assigns a Narrow Moat (59/100, trend: stable), High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 47/100.
Our analysis does not support a constructive view on Verrica Pharmaceuticals Inc. at this time. The combination of the current quantitative profile, high uncertainty, and poor capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.
Analysis derived from Blank Capital Research quantitative terminal. For informational purposes only. No trade solicitation. Past performance not indicative of future results. Consult a qualified advisor.
We assign Verrica Pharmaceuticals Inc. a Narrow Moat rating with a composite moat score of 59/100. The ROIC-WACC spread of +236.9% is the primary signal of economic value creation. The company possesses identifiable competitive advantages, though they are less entrenched than those of wide-moat peers. Our analysis indicates that Verrica Pharmaceuticals Inc. can sustain above-average returns on invested capital for at least 10 years, with the strongest contributor being economic value creation at 17.8/20.
The strongest moat sources are economic value creation (17.8/20) and reinvestment efficiency (13/20). ROIC 246.2% vs WACC 9.4% (spread +236.9%). Capital turnover 27.48x, R&D intensity 20.8%. These pillars form the core of Verrica Pharmaceuticals Inc.'s competitive identity and are the primary drivers of excess returns in our framework.
Areas of relative weakness include financial resilience (6.6/20) and growth durability (8.6/20). Interest coverage 0.8x, Net debt/EBITDA 0.3x. Improvement in these areas could meaningfully widen the moat over time, while deterioration would be an early warning of competitive erosion.
Our moat trend assessment is Stable. Multi-year ROIC and operating margin trajectories show neither meaningful improvement nor deterioration, suggesting the competitive position is steady. We expect Verrica Pharmaceuticals Inc.'s moat profile to remain largely unchanged absent a material shift in return on capital or industry dynamics.
Key profit drivers include gross margins of 80% providing a solid profitability foundation, robust top-line growth of 177% expanding the revenue base, returns on equity of 101.8% driving shareholder value creation. The margin cascade from 80% gross to -71% operating to -94.5% net reveals the company's cost structure and reinvestment intensity. Our analysis indicates that profit quality is adequate though not exceptional, with the quality factor at the 43th percentile.
The margin profile shows gross margins of 80%, operating margins of -71%, net margins of -94.5%. Return metrics include ROE of 101.8% and ROA of -79.9%. Relative to the Manufacturing sector, gross margins are 37.2 percentage points above the sector median of 43%, and ROE of 101.8% compares to a sector median of -2.5%.
The balance sheet reflects revenue growth of 177%. Overall balance sheet health is adequate for the current business environment.
The Reduce rating (composite 49.6/100) reflects multi-factor weakness, and historically, stocks in this scoring range have underperformed the market by a meaningful margin.
Thin net margins of -94.5% provide limited cushion against cost pressures, competitive pricing, or macroeconomic headwinds — even small changes in costs could swing the company to a loss.
Verrica Pharmaceuticals is under increased investor scrutiny following recent operational and regulatory updates, with focus shifting to the execution of its international commercial strategy, particularly in Japan. The company's pipeline development, including VP-315 for skin cancer and YCANTH expansion for common warts, also remains a critical valuation component. Additionally, investor attention is on institutional shareholder activity and the company's ability to balance clinical development costs with revenue growth from approved products.
Verrica Pharmaceuticals' partner Torii Pharmaceutical Co. Ltd. has launched YCANTH in Japan for treating molluscum contagiosum, following regulatory approval. This launch allows Verrica to receive royalties on net sales in Japan after a manufacturing transfer to Torii. The company has also demonstrated significant revenue growth and is advancing YCANTH for other conditions, supported by recent financing and positive analyst ratings.
Verrica Pharmaceuticals Inc. (NASDAQ:VRCA) has received a "Moderate Buy" consensus rating from six analysts, with an average 12-month price target of $17. The company's recent quarterly earnings beat expectations significantly, though analysts still forecast a negative EPS for the current fiscal year. Insider buying, including a large purchase by Director Paul B. Manning, indicates strong internal confidence in the company.
Sovran Advisors LLC significantly reduced its stake in Verrica Pharmaceuticals Inc. (NASDAQ:VRCA) by 90.2% in the third quarter, selling 676,586 shares. Despite this, other institutional investors like Goldman Sachs and Invesco increased their holdings. The company has recently shown strong operational performance with a significant EPS surprise and revenue beat, alongside substantial insider buying from Director Paul B. Manning and other company insiders.
Wall Street Zen upgraded Verrica Pharmaceuticals (NASDAQ:VRCA) to a "buy" rating, with a consensus "Moderate Buy" rating and a target price of $17.00. This upgrade follows significant insider buying, with Director Paul B. Manning purchasing over 2.7 million shares, contributing to insiders owning about 54% of the company. Despite beating quarterly earnings estimates, the stock opened down, reflecting analyst projections of a negative full-year EPS for the company.
Above 50MA
37.18%
Net New Highs
+51081