Associated Capital Group, Inc. provides investment advisory services in the United States. The company offers alternative investment management and asset management services. It also invests in new and existing businesses. The company was founded in 1976 and is headquartered in Greenwich, Connecticut.

Associated Capital Group, Inc.

Financial Services

The company has a track record of regular dividend payments. It has paid dividends in each of the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are unclear. In the past 12 months, the dividend yield has been outstanding and can be rated excellent compared to its peers. On average, the company pays dividends twice a year. 

AC reported revenue of USD 12mn in the last 12 months, down 59% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 14% from FY24 to USD 1.79. Market expects EPS to reach USD 1.84 in FY25.

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). It has underperformed this peer group by 1ppts over six months and grown 3ppts faster in the past month. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is neutral.

The company has reported very poor EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 222.2% in the last 12 months, up from 17.5% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 4.1% in the last 12 months, an increase from 4.0% in FY23. The market analysts predict that RoA will be 4.3% in FY24, again stronger than its peers. 

In the last 12 months, the return on capital employed (RoCE) grew to 4.1%, below the peers. The consensus estimate for FY24 for RoCE is 0.9%, again behind the peers. 

Associated Capital Group, Inc. reported a return on equity (RoE) of 4.2% in the last 12 months, up from 4.2% in FY23. The market consensus projects an RoE of 4.5% in FY24, again behind its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.4 in the past several years. This ratio implies a weak shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

AC has poor trading liquidity. It will take at least a day or two for the average private investor to sell a common position under normal market conditions. Liquidity is relatively stable and becomes extremely unfavourable on the days with the lowest activity. However, under highly turbulent market conditions, the trading volume tends to improve significantly. The stock has a small market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is moderate. We note resilient historical revenue growth, low margin volatility, and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to bleak profitability, negligible return on capital, and inadequate interest coverage.

In highly turbulent market conditions, AC is moderately volatile. In other words, the stock will fall more than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be moderate. 

In normal market circumstances, AC is moderately volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will move slightly wider than the index. The stock's losses on its worst days (less than 1-5% of the time) will range from very low to minimal. 

Based on key historical and expected multiples, the stock is overvalued relative to its peers. Specifically, the stock is 'expensive' on P/E, overvalued on EV/EBITD. 

Associated Capital Group, Inc.

$ 37.02

4

Associated Capital Group, Inc.

$ 37.02

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

$ 37.02

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