WhiteHorse Finance, Inc. (NASDAQ: WHF)

Sector: Financial Services Industry: Asset Management CIK: 0001552198
Market Cap 102.44 Mn
P/B 0.42
P/E -36.22
P/S 2.18
ROIC (Qtr) 4.48
Div Yield % 25.61
Rev 1y % (Qtr) -22.58
Total Debt (Qtr) 323.87 Mn
Debt/Equity (Qtr) 1.22
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About

WhiteHorse Finance, Inc. (WHF) operates as a business development company (BDC) in the United States, focusing on generating current income and capital appreciation by investing in senior secured loans to lower middle market companies. This non-diversified, closed-end management investment company is an affiliate of H.I.G. Capital, a leading global alternative asset manager, and is externally managed by WhiteHorse Advisers. WhiteHorse Finance's primary business activities involve originating and investing in debt securities, mainly senior secured...

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Investment thesis

Bull case

  • Strong operating cash flow of 97.39M provides 18.54x coverage of SG&A expenses 5.25M, showing efficient operational cost management.
  • Operating cash flow of 97.39M provides strong 130.72x coverage of operating expenses 745000, showing operational efficiency.
  • Strong free cash flow of 97.39M provides 18.54x coverage of SG&A expenses 5.25M, indicating efficient cost management.
  • Free cash flow of 97.39M provides solid 130.72x coverage of operating expenses 745000, showing operational efficiency.
  • Operating cash flow of 97.39M exceeds receivables of 10.04M by 9.70x, demonstrating excellent collection efficiency.

Bear case

  • Operating cash flow of 97.39M provides thin coverage of dividend payments of (41.49M) with a -2.35 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of 97.39M represents just -3.53x of debt issuance (27.55M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • R&D investment of 0 represents just 0x of SG&A expenses of 5.25M, indicating potential underinvestment in innovation relative to administrative overhead.
  • Other current assets of 0 provide weak coverage of payables of 31.91M, which is 0x, suggesting potential working capital stress in near term.

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 0.40 0.94
EV to Cash from Ops. EV/CFO -27.77 41.10
EV to Debt EV to Debt 0.77 15.28
EV to EBIT EV/EBIT -88.41 23.47
EV to EBITDA EV/EBITDA 12.05 47.80
EV to Free Cash Flow [EV/FCF] EV/FCF -27.77 38.62
EV to Market Cap EV to Market Cap 2.44 7.81
EV to Revenue EV/Rev 5.31 27.38
Price to Book Value [P/B] P/B 0.42 2.34
Price to Earnings [P/E] P/E -36.22 11.81
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.24 4.66
Dividend Payout Ratio % Div Payout % (Qtr) 415.10 -5.56
Dividend per Basic Share Div per Share (Qtr) 1.58 1.73
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 37.59 49.83
Interest Coverage Interest Coverage 0.00 25.16
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex Growth (1y) % 0.00 -35.10
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 130.57 15.43
Dividend Growth (1y) % Div 1y % (Qtr) -11.76 1.65
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -4.98 -90.82
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -31.06 35.24
EBIT Growth (1y) % EBIT 1y % (Qtr) -4.98 -22.13
EBT Growth (1y) % EBT 1y % (Qtr) -4.98 -163.05
EPS Growth (1y) % EPS 1y % (Qtr) -4.44 -20.61
FCF Growth (1y) % FCF 1y % (Qtr) 32.53 220.21
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -26.87 -53.96
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.12 0.22
Cash Payout Ratio Cash Payout (Qtr) 0.43 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 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) 12.90 -114.76
EBIT Margin % EBIT Margin % (Qtr) 12.91 -127.24
EBT Margin % EBT Margin % (Qtr) 12.91 -150.97
Gross Margin % Gross Margin % (Qtr) 43.90 67.88
Net Profit Margin % Net Margin % (Qtr) 12.90 -148.68