Stem, Inc. — financial distress indicators
Financial-health summary
Stem, Inc.'s reported numbers place it in the 'Very weak' financial-health band (distress score 81/100). The main indicators are liabilities exceed assets (negative equity), operating profit does not cover interest and market-implied default probability >20%. Independently, the Ohlson accounting model puts its 1-year failure probability at 100% and the market-implied (Merton) default probability is 93.5%.
Stress by dimension
Share price — last 12 months
Indicators behind the score
Each red flag shows the evidence from the company’s own filings and the financial or legal principle behind it. Points add to the 0–100 score.
Total liabilities are 1.94× total assets.
Balance-sheet insolvency test: debts exceeding the fair value of assets is the statutory definition of 'insolvent' in 11 U.S.C. §101(32).
Interest coverage (EBIT / interest) is -1.68×.
When EBIT < interest, debt service is funded from cash reserves or new borrowing — the classic precursor to payment default and covenant breach.
Merton distance-to-default -1.52 σ → PD 94%.
Structural (Merton/KMV) model: equity is a call option on assets; low distance-to-default means assets are close to the default point.
Price is -86% from its 52-week high.
Equity markets price distress early; collapses of this size usually reflect fear of wipe-out in a restructuring.
O-score 5.64 → model probability 100%.
Ohlson (1980) logit model of 1-year corporate failure; O > 0 (p > 50%) is the original failure cut-off.
Recurring net losses.
Repeated losses are a core input in both Ohlson and Altman failure models.
Operating cash flow negative in 2 of the last 3 years. The company is profitable, so this likely reflects working-capital or loan-book growth.
A business that cannot fund itself from operations depends on external capital to survive.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- No material mitigating factors found in the available data.
📰 Recent news scan
- A new research framework asks if nutrition can affect the body's own repair system - Stock TitanGoogle News · 2026-10-08
- Stem stock costs EUR 3.97 as Q3 estimates point to USD 39.28 million - AD HOC NEWSGoogle News · 2026-10-08
- STEM Oct 2026 20.000 call (STEM261016C00020000) Interactive Stock Chart - Yahoo! Finance CanadaGoogle News · 2026-10-05
- Top Stem (STEM) Competitors 2026 - MarketBeatGoogle News · 2026-10-02
- STEM president Michael Carlson sells $681 in company stock - Investing.comGoogle News · 2026-09-30
- Stem (NYSE:STEM) Stock Forecast & Analyst Predictions - Simply Wall StreetGoogle News · 2026-09-25
⚖️ U.S. legal pathway — Title 11, U.S. Code
Which chapter would apply?
- Chapter 11 — reorganisation. Management usually stays in control as debtor-in-possession; the automatic stay (§362) halts collection; a plan must meet the best-interests test (§1129(a)(7)) and the absolute priority rule (§1129(b)) — creditors are paid before shareholders, who are frequently wiped out.
- Chapter 7 — liquidation. A trustee sells assets and distributes proceeds by statutory priority (§§507, 726).
- Subchapter V (“Chapter 5”) is a fast track for small-business debtors under a statutory debt cap, but SEC-reporting companies are excluded (§101(51D)) — so it rarely applies to listed companies.
What typically triggers a filing
- Payment default or covenant breach lenders will not waive; a debt maturity that cannot be refinanced.
- Auditor going-concern doubt (ASC 205-40 / PCAOB AS 2415) — often itself a default trigger in loan agreements.
- Creditors can force a case with an involuntary petition (§303) if debts are not paid as they come due.
- Delisting after sustained sub-$1 prices or equity deficits cuts off equity funding.
Transactions shortly before filing can be clawed back (preferences — 90 days, §547; fraudulent transfers — 2 years, §548).
Frequently asked questions
What do Stem, Inc.'s financial-health indicators show?
As of 2026-10-08, Stem, Inc.'s public financial data places it in the 'Very weak' band with a distress score of 81/100, driven by liabilities exceed assets (negative equity), operating profit does not cover interest and market-implied default probability >20%. This is a statistical screen of reported numbers — it does not mean the company is insolvent, has defaulted or will enter insolvency proceedings.
What is Stem, Inc.'s financial distress score?
81/100 ('Very weak'). Ohlson O-score 5.64 (model 1-year failure probability 100%). Merton distance-to-default -1.52 σ (model default probability 93.5%).
What works in Stem, Inc.'s favour?
No material mitigating factors were found in the available data.
How are shareholders treated if a company enters insolvency?
In a Chapter 11 reorganisation the absolute priority rule pays secured lenders, then unsecured creditors, before shareholders — so existing shares are usually cancelled or heavily diluted. In Chapter 7 the company is liquidated and shareholders rarely recover anything.
Other Utilities & Power companies with distress indicators
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- PowerBank Corporation (PBK)Weak 68/100
- Abundia Global Impact Group Inc (AGIG)Weak 60/100
- Brookfield Renewable Corporation (BEPC)Weak 51/100
Methodology
Score = capped sum of rule-based red flags across seven dimensions (liquidity, solvency, profitability, cash flow, sales trend, market signal, news). Ohlson O-score (1980) gives an accounting-based 1-year failure probability; Merton distance-to-default (Bharath & Shumway 2008) gives a market-implied probability. Financial institutions use a capital-based rule set. Recalculated every trading day from the latest filings, prices and news.