Diamond Hill Investment Group Inc (NASDAQ: DHIL)

Sector: Financial Services Industry: Asset Management CIK: 0000909108
Market Cap 464.16 Mn
P/B 2.57
P/E 9.90
P/S 3.10
ROIC (Qtr) 17.83
Div Yield % 6.73
Rev 1y % (Qtr) -4.14
Total Debt (Qtr) 6.50 Mn
Debt/Equity (Qtr) 0.04
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About

Diamond Hill Investment Group, Inc., or DHIL, operates as an investment management firm, offering its services to both institutional and individual clients. The company's main business activities encompass managing investment portfolios, primarily for pension funds, endowments, and foundations, as well as individual investors. With its headquarters in Columbus, Ohio, DHIL conducts its operations in a highly regulated environment, adhering to various federal, state, and non-U.S. laws and regulations. DHIL generates revenue predominantly through...

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Investment thesis

Bull case

  • Strong tangible asset base of 256.27M provides 39.45x coverage of total debt 6.50M, indicating robust asset backing and low credit risk.
  • Cash position of 43.02M provides exceptional 70.13x coverage of minority interest expenses 613449, indicating strong liquidity.
  • Retained earnings of 162.33M represent substantial 0.90x of equity 180.94M, indicating strong internal capital generation.
  • Cash reserves of 43.02M provide comfortable 288.30x coverage of tax obligations 149218, showing strong fiscal management.
  • Cash position of 43.02M fully covers payables of 7.58M by 5.68x, showing strong vendor relationship management.

Bear case

  • Operating cash flow of (32.23M) barely covers its investment activities of 63.59M, with a coverage ratio of -0.51, 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 (16.36M) with a 1.97 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 12.67M, with a -2.54 ratio indicating potential earnings quality issues.
  • Free cash flow of (35.08M) provides weak coverage of capital expenditures of 2.85M, with a -12.31 ratio suggesting additional external financing needs for growth initiatives.
  • Operating cash flow of (32.23M) provides minimal -1.87x coverage of tax expenses of 17.22M, suggesting potential tax planning inefficiencies or unsustainable tax positions.

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 1.65 0.94
EV to Cash from Ops. EV/CFO -13.08 41.10
EV to Debt EV to Debt 64.92 15.28
EV to EBIT EV/EBIT 6.58 23.47
EV to EBITDA EV/EBITDA 9.39 47.80
EV to Free Cash Flow [EV/FCF] EV/FCF -12.02 38.62
EV to Market Cap EV to Market Cap 0.91 7.81
EV to Revenue EV/Rev 2.82 27.38
Price to Book Value [P/B] P/B 2.57 2.34
Price to Earnings [P/E] P/E 9.90 11.81
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 2.86 4.66
Dividend Payout Ratio % Div Payout % (Qtr) 34.80 -5.56
Dividend per Basic Share Div per Share (Qtr) 6.00 1.73
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) -46.49 49.83
Interest Coverage Interest Coverage 0.00 25.16
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -601.02 -35.10
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 27.59 15.43
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 1.65
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -5.11 -90.82
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 23.65 35.24
EBIT Growth (1y) % EBIT 1y % (Qtr) -4.05 -22.13
EBT Growth (1y) % EBT 1y % (Qtr) -4.05 -163.05
EPS Growth (1y) % EPS 1y % (Qtr) -2.04 -20.61
FCF Growth (1y) % FCF 1y % (Qtr) -172.98 220.21
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 8.45 -53.96
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.58 0.22
Cash Payout Ratio Cash Payout (Qtr) -0.56 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) 0.04 0.70
Interest Cover Ratio Interest Cover Ratio 0.00 25.16
Times Interest Earned Times Interest Earned 0.00 25.16
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 43.60 -114.76
EBIT Margin % EBIT Margin % (Qtr) 42.82 -127.24
EBT Margin % EBT Margin % (Qtr) 42.82 -150.97
Gross Margin % Gross Margin % (Qtr) 48.70 67.88
Net Profit Margin % Net Margin % (Qtr) 31.30 -148.68