Great Elm Group, Inc. (GEG) Stock Analysis and Metrics

Sector: Financial Services Industry: Asset Management CIK: 0001831096

Market Cap 68.21 Mn

P/B 1.22

P/E -4.98

P/S 3.02

ROIC (Qtr) -9.35

Div Yield % 0.00

Rev 1y % (Qtr) -14.14

Total Debt (Qtr) 63.49 Mn

Debt/Equity (Qtr) 1.14

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About

Great Elm Group, Inc. (GEG) is an alternative asset management company operating in the financial industry. The company's main business activities involve investing in and managing various assets, including private equity, real estate, and credit investments. Great Elm Group generates revenue through investment management agreements, property management fees, and administration fees. Its customer base primarily consists of institutional investors, family offices, and high-net-worth individuals. The company's credit segment focuses on investing...

Great Elm Group, Inc. (GEG) is an alternative asset management company operating in the financial industry. The company's main business activities involve investing in and managing various assets, including private equity, real estate, and credit investments. Great Elm Group generates revenue through investment management agreements, property management fees, and administration fees. Its customer base primarily consists of institutional investors, family offices, and high-net-worth individuals.

The company's credit segment focuses on investing in middle-market companies, providing financing solutions to businesses, and generating returns through interest income and capital appreciation. Great Elm Group's real estate segment involves investing in and managing a diversified portfolio of commercial and residential properties, generating rental income and capital appreciation. The specialty finance segment invests in and manages a portfolio of assets, including consumer and commercial loans, trade receivables, and other financial assets, generating returns through interest income, fees, and capital appreciation. The private equity segment invests in and manages a portfolio of private companies, generating returns through equity appreciation and dividend income.

Monomoy UpREIT is the operating partnership of Monomoy Properties REIT, LLC, which focuses on building an industry-leading single-tenant industrial portfolio specializing in net-leased assets, including Class B & C warehouse, distribution, and light manufacturing assets. Great Elm Group acquired a majority stake in Forest Investments, Inc., a real estate investment and management company, in December 2022, with plans to continue growing its portfolio of industrial and commercial properties.

Great Elm Group operates in a competitive landscape, facing competition from larger, well-financed organizations, including global asset managers, investment banks, commercial banks, private equity funds, sovereign wealth funds, and state-owned enterprises. The company's competitive advantages include its experienced management team, diversified portfolio, and ability to identify and capitalize on attractive investment opportunities.

Great Elm Group's customers include institutional investors, family offices, and high-net-worth individuals. The company's investment management agreements and property management fees are primarily generated from its relationships with these customers.

The brand names and/or trade names of Great Elm Group's products and services include Monomoy UpREIT, Forest Investments, and the company's credit, real estate, specialty finance, and private equity segments. These segments represent the company's diversified portfolio and its commitment to long-duration and permanent capital vehicles across various alternative strategies.

Investment thesis

Bull case

Healthy cash reserves of 57.59M provide 162.21x coverage of short-term debt 355000, demonstrating strong liquidity position and minimal refinancing risk.
Cash position of 57.59M provides exceptional 120.47x coverage of minority interest expenses 478000, indicating strong liquidity.
Tangible assets of 123.61M provide robust 11.30x coverage of other current liabilities 10.94M, indicating strong asset backing.
Short-term investments of 47.77M provide solid 4.36x coverage of other current liabilities 10.94M, indicating strong liquidity.
Operating cash flow of 2.75M fully covers other non-current liabilities 990000 by 2.78x, showing strong long-term stability.

Bear case

Cash reserves of 57.59M provide limited coverage of acquisition spending of (2.50M), which is -23.03x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
The company's operating cash flow of 2.75M shows concerning coverage of stock compensation expenses of 2.12M, with a 1.29 ratio indicating potential earnings quality issues.
Operating earnings of (9.46M) show weak coverage of depreciation charges of 1.35M, with a -7.03 ratio indicating high capital intensity and potential reinvestment needs.
Free cash flow of 2.75M represents just -1.56x of debt issuance (1.76M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
High depreciation of 1.35M relative to operating cash flow of 2.75M, which is 0.49x suggests significant maintenance capital requirements affecting free cash flow.

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
EV to Assets EV to Assets	0.53	0.94
EV to Cash from Ops. EV/CFO	26.31	41.10
EV to Debt EV to Debt	1.14	15.28
EV to EBIT EV/EBIT	-7.65	23.47
EV to EBITDA EV/EBITDA	-6.79	47.80
EV to Free Cash Flow [EV/FCF] EV/FCF	26.31	38.62
EV to Market Cap EV to Market Cap	1.06	7.81
EV to Revenue EV/Rev	3.20	27.38
Price to Book Value [P/B] P/B	1.22	2.34
Price to Earnings [P/E] P/E	-4.98	11.81

Dividend Metrics	Value	Ind Avg
Dividend Coverage Ratio Dividend Coverage Ratio	0.00	4.66
Dividend Payout Ratio % Div Payout % (Qtr)	0.00	-5.56
Dividend per Basic Share Div per Share (Qtr)	0.00	1.73
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr)	0.00	49.83
Interest Coverage Int. cover (Qtr)	-2.28	25.16

Growth Metrics	Value	Ind Avg
Capex Growth (1y) % Capex 1y % (Qtr)	0.00	-35.10
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr)	22.90	15.43
Dividend Growth (1y) % Dividend Growth (1y) %	0.00	1.65
EBIAT Growth (1y) % EBIAT 1y % (Qtr)	-7,652.93	-90.82
EBITDA Growth (1y) % EBITDA 1y % (Qtr)	-62.09	35.24
EBIT Growth (1y) % EBIT 1y % (Qtr)	-316.24	-22.13
EBT Growth (1y) % EBT 1y % (Qtr)	-13,181.73	-163.05
EPS Growth (1y) % EPS 1y % (Qtr)	0.00	-20.61
FCF Growth (1y) % FCF 1y % (Qtr)	150.17	220.21
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr)	2.26	-53.96

Liquidity Ratios	Value	Ind Avg
Asset Utilization Ratio Asset Util Ratio (Qtr)	0.17	0.22
Cash Payout Ratio Cash Payout (Qtr)	0.00	0.36
Cash Ratio Cash Ratio (Qtr)	4.93	0.38
Current Ratio Curr Ratio (Qtr)	10.32	0.86
Debt to Equity Ratio Debt/Equity (Qtr)	1.14	0.70
Interest Cover Ratio Int Coverage (Qtr)	-2.28	25.16
Times Interest Earned Times Interest Earned (Qtr)	-2.28	25.16

Profitability	Value	Ind Avg
EBITDA Margin % EBITDA Margin % (Qtr)	-35.90	-114.76
EBIT Margin % EBIT Margin % (Qtr)	-41.81	-127.24
EBT Margin % EBT Margin % (Qtr)	-60.16	-150.97
Gross Margin % Gross Margin % (Qtr)	31.00	67.88
Net Profit Margin % Net Margin % (Qtr)	-60.60	-148.68

Research Tools

Great Elm Group, Inc. (NASDAQ: GEG)

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Investment thesis

Bull case

Bear case

Peer comparison

Industry comparisons

Research Tools

Great Elm Group, Inc. (NASDAQ: GEG)

About

Investment thesis

Bull case

Bear case

Peer comparison

Industry comparisons

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