Burford Capital Ltd (NYSE: BUR)

Sector: Financial Services Industry: Asset Management CIK: 0001714174
Market Cap 2.14 Bn
P/B 0.86
P/E 24.62
P/S 4.53
ROIC (Qtr) 6.93
Div Yield % 0.62
Rev 1y % (Qtr) -71.98
Total Debt (Qtr) 3.04 Bn
Debt/Equity (Qtr) 1.22
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About

Burford Capital Ltd, known as Burford, operates in the litigation finance industry, providing financing to plaintiffs and claimants in legal disputes. Its ticker symbol is BUR. The company's main business activities revolve around litigation finance solutions and investment management. Burford operates in various markets, including intellectual property, commercial, and securities disputes, and caters to a diverse clientele, which includes law firms, corporations, and individuals seeking to finance their legal disputes. Burford generates revenue...

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Investment thesis

Bull case

  • Robust free cash flow of 31.52M exceeds capital expenditure of 707000 by 44.58x, indicating strong organic growth funding capability.
  • Cash position of 677.65M provides exceptional 13.93x coverage of minority interest expenses 48.64M, indicating strong liquidity.
  • Cash reserves of 677.65M provide comfortable 13.08x coverage of tax obligations 51.80M, showing strong fiscal management.
  • Retained earnings of 1.85B provide strong 13.82x coverage of intangibles 134.02M, indicating quality earnings retention.
  • Retained earnings of 1.85B represent substantial 0.74x of equity 2.50B, indicating strong internal capital generation.

Bear case

  • Operating cash flow of 32.23M barely covers its investment activities of (8.96M), with a coverage ratio of -3.60, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 32.23M provides thin coverage of dividend payments of (27.30M) with a -1.18 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • The company's operating cash flow of 32.23M shows concerning coverage of stock compensation expenses of 19.75M, with a 1.63 ratio indicating potential earnings quality issues.
  • Operating cash flow of 32.23M provides minimal 1.77x coverage of tax expenses of 18.18M, suggesting potential tax planning inefficiencies or unsustainable tax positions.
  • Free cash flow of 31.52M represents just 0.09x of debt issuance 345.44M, suggesting concerning reliance on leverage rather than internal cash generation for growth.

Long-Term Debt, Type Breakdown of Revenue (2024)

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Asset Management
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 BLK BlackRock, Inc. 199.59 Bn 85.40 21.98 15.04 Bn
2 BN BROOKFIELD Corp /ON/ 103.94 Bn 31.52 5.64 262.97 Bn
3 AMP Ameriprise Financial Inc 88.69 Bn 55.02 7.20 5.89 Bn
4 BX Blackstone Inc. 88.51 Bn 49.39 10.93 12.89 Bn
5 KKR KKR & Co. Inc. 55.86 Bn 28.33 13.23 53.12 Bn
6 STT State Street Corp 46.52 Bn 21.77 3.91 34.72 Bn
7 NTRS Northern Trust Corp 34.14 Bn 33.31 6.71 15.64 Bn
8 RJF Raymond James Financial Inc 32.89 Bn 37.63 4.14 5.10 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.66 0.94
EV to Cash from Ops. EV/CFO 137.16 41.10
EV to Debt EV to Debt 1.46 15.28
EV to EBIT EV/EBIT 17.76 23.47
EV to EBITDA EV/EBITDA 11.32 47.80
EV to Free Cash Flow [EV/FCF] EV/FCF 140.24 38.62
EV to Market Cap EV to Market Cap 2.06 7.81
EV to Revenue EV/Rev 9.35 27.38
Price to Book Value [P/B] P/B 0.86 2.34
Price to Earnings [P/E] P/E 24.62 11.81
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 3.19 4.66
Dividend Payout Ratio % Div Payout % (Qtr) 31.50 -5.56
Dividend per Basic Share Div per Share (Qtr) 0.06 1.73
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 43.75 49.83
Interest Coverage Int. cover (Qtr) 1.73 25.16
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -79.44 -35.10
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 18.06 15.43
Dividend Growth (1y) % Div 1y % (Qtr) -65.57 1.65
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -45.46 -90.82
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 0.00 35.24
EBIT Growth (1y) % EBIT 1y % (Qtr) -40.14 -22.13
EBT Growth (1y) % EBT 1y % (Qtr) -63.17 -163.05
EPS Growth (1y) % EPS 1y % (Qtr) -67.23 -20.61
FCF Growth (1y) % FCF 1y % (Qtr) -80.85 220.21
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -36.57 -53.96
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.07 0.22
Cash Payout Ratio Cash Payout (Qtr) 0.83 0.36
Cash Ratio Cash Ratio 0.00 0.38
Current Ratio Current Ratio 0.00 0.86
Debt to Equity Ratio Debt/Equity (Qtr) 1.22 0.70
Interest Cover Ratio Int Coverage (Qtr) 1.73 25.16
Times Interest Earned Times Interest Earned (Qtr) 1.73 25.16
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 0.00 -114.76
EBIT Margin % EBIT Margin % (Qtr) 52.61 -127.24
EBT Margin % EBT Margin % (Qtr) 22.26 -150.97
Gross Margin % Gross Margin % (Qtr) 100.00 67.88
Net Profit Margin % Net Margin % (Qtr) 18.40 -148.68