Great Elm Group (GEG) AI Stock Analysis

70 Followers

Top Page

Great Elm Group

(NASDAQ:GEG)

60Neutral

Great Elm Group's overall stock score reflects its mixed financial performance, with strengths in revenue growth and strategic initiatives as highlighted in the earnings call. However, challenges remain in profitability and cash flow, as well as valuation concerns due to a negative P/E ratio. Technical indicators are stable, lacking strong momentum. Overall, the earnings call provides a positive outlook, but financial and valuation challenges temper the score.

Great Elm Group (GEG) vs. S&P 500 (SPY)

Market Cap

$53.28M

Dividend YieldN/A

Average Volume (3M)21.03K

Price to Earnings (P/E)―

Beta (1Y)-0.09

Revenue Growth73.74%

EPS Growth-98.00%

CountryUS

Employees31

SectorFinancial

Sector Strength79

IndustryMedical - Distribution

Share Statistics

EPS (TTM)>-0.01

Shares Outstanding28,341,553

10 Day Avg. Volume17,067

30 Day Avg. Volume21,026

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)2.95

Price to Cash Flow (P/CF)-3.50

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

Great Elm Group Business Overview & Revenue Model

Company DescriptionGreat Elm Group (GEG) is a diversified holding company with operations primarily in the investment management and real estate sectors. The company focuses on acquiring and managing a portfolio of operating businesses and investments, leveraging its expertise to drive growth and deliver value to shareholders. Through its subsidiaries, GEG engages in various activities including asset management, real estate investments, and other strategic business interests.

How the Company Makes MoneyGreat Elm Group generates revenue through a combination of asset management fees, investment income, and real estate operations. In its investment management segment, GEG earns fees based on assets under management and performance incentives from managing investment funds and accounts. The company's real estate segment contributes to revenue through rental income from owned properties and potential capital gains from property sales. Additionally, GEG may invest in strategic business opportunities that can provide further financial returns. Key factors influencing the company's earnings include market conditions, the performance of its investment portfolio, and the operational efficiency of its real estate holdings.

Great Elm Group Financial Statement Overview

Summary

Great Elm Group shows signs of financial stabilization with improved gross margins and manageable debt levels. However, the company faces challenges in achieving consistent profitability and positive operational cash flows. Strategic improvements may be necessary to enhance financial performance and strengthen cash flow generation.

Income Statement

Neutral

The income statement shows fluctuating revenues with a recent decline from 2022 to TTM (Trailing-Twelve-Months). The gross profit margin improved in TTM to 34.3%, indicating better cost management. However, net profit margin remains extremely low at 0.02% in TTM, reflecting minimal profitability. Historical EBIT and EBITDA margins have been inconsistent, demonstrating operational challenges.

Balance Sheet

Neutral

The balance sheet reflects moderate financial health. The debt-to-equity ratio in TTM is 0.60, indicating manageable debt levels relative to equity. The equity ratio stands at 45.0%, suggesting a solid equity base. However, asset base and equity have shrunk compared to previous years, indicating potential strategic or operational adjustments.

Cash Flow

Neutral

Cash flows show volatility with negative operating cash flow in TTM, raising concerns about operational efficiency. Free cash flow has improved to $1.42M in TTM, indicating some level of cash generation capability. However, the operating cash flow to net income ratio is negative, highlighting cash conversion issues.

TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Breakdown
Income Statement		Total Revenue
19.20M	17.83M	8.66M	67.97M	60.85M	64.10M
	Gross Profit
6.58M	977.00K	-1.53M	4.27M	4.61M	11.37M
	EBIT
636.00K	-7.84M	-11.21M	-4.11M	-3.69M	667.00K
	EBITDA
6.34M	4.60M	21.91M	-13.15M	6.77M	2.06M
	Net Income Common Stockholders
3.00K	-1.39M	27.73M	-15.04M	-9.33M	-13.13M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
109.00M	116.50M	117.37M	73.43M	74.92M	49.22M
	Total Assets
187.06M	140.45M	135.89M	168.09M	161.87M	195.44M
	Total Debt
0.00	61.18M	63.44M	73.92M	29.61M	112.26M
	Net Debt
-59.85M	10.67M	3.27M	50.32M	5.23M	71.74M
	Total Liabilities
112.53M	70.25M	72.05M	125.83M	97.96M	130.76M
	Stockholders Equity
74.53M	62.71M	63.84M	33.50M	54.36M	60.79M
Cash Flow		Free Cash Flow
1.42M	-15.55M	-2.43M	22.73M	-25.95M	4.54M
	Operating Cash Flow
-5.48M	-15.55M	-2.37M	29.28M	-18.98M	13.39M
	Investing Cash Flow
21.19M	2.27M	83.96M	-40.05M	-15.48M	-6.63M
	Financing Cash Flow
-9.67M	2.84M	-47.62M	9.98M	18.34M	21.78M

Great Elm Group Technical Analysis

Technical Analysis Sentiment

Negative

Last Price1.88

Price Trends

50DMA

1.88

Positive

100DMA

1.84

Positive

200DMA

1.83

Positive

Market Momentum

MACD

0.01

Positive

RSI

50.23

Neutral

STOCH

35.00

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GEG, the sentiment is Negative. The current price of 1.88 is below the 20-day moving average (MA) of 1.91, above the 50-day MA of 1.88, and above the 200-day MA of 1.83, indicating a neutral trend. The MACD of 0.01 indicates Positive momentum. The RSI at 50.23 is Neutral, neither overbought nor oversold. The STOCH value of 35.00 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GEG.

Great Elm Group Risk Analysis

Great Elm Group disclosed 23 risk factors in its most recent earnings report. Great Elm Group reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Great Elm Group Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ARCC	75 Outperform	$14.28B	8.55	12.40%	9.20%	19.95%	-10.57%
MAIN	74 Outperform	$4.69B	9.04	19.26%	5.67%	51.80%	12.05%
SLRC	74 Outperform	$824.32M	8.61	9.67%	10.85%	14.33%	25.35%
GAIN	71 Outperform	$481.10M	6.81	14.74%	7.35%	-8.68%	-3.76%
HTGC	67 Neutral	$3.03B	10.86	13.71%	9.15%	-1.49%	-29.48%
Sector *	64 Neutral	$13.46B	9.44	9.34%	4.72%	16.14%	-8.80%
GEG	60 Neutral	$53.28M	―	<0.01%	―	73.74%	-98.00%

* Financial Sector Average

Performance Comparison

GEG

Great Elm Group

1.88

-0.06

-3.09%

GAIN

Gladstone Investment

12.70

0.22

1.76%

HTGC

Hercules Capital

16.83

0.13

0.78%

MAIN

Main Street Capital

51.48

7.08

15.95%

SLRC

SLR Investment Corp.

14.50

0.87

6.38%

ARCC

Ares Capital

19.84

1.10

5.87%

Great Elm Group Earnings Call Summary

Earnings Call Date: Feb 5, 2025 | % Change Since: 3.30% | Next Earnings Date: May 8, 2025

Earnings Call Sentiment Positive

The earnings call demonstrated a strong performance with significant revenue growth, successful capital raises, strategic acquisitions, and improvement in net income. The company has maintained a strong financial position with substantial cash reserves and a successful share buyback program.

Highlights

Revenue Growth

Total revenue grew 24% year-over-year to $3.5 million, primarily driven by increased revenue from Monomoy BTS and management fees from GECC.

Increased Assets Under Management

Fee-paying assets under management (AUM) increased by 17% year-over-year, reaching approximately $538 million.

Equity Capital Raise

Great Elm Capital Corp. (GECC) raised an additional $13.2 million of equity at net asset value in December 2024, marking the third equity capital raise in calendar 2024.

Net Income Improvement

The company generated net income from continuing operations of $1.4 million for the quarter, compared to a net loss of $0.2 million in the prior year period.

Strategic Acquisition

Acquired Greenfield CRE, expanding real estate capabilities and launching Monomoy Construction Services to enhance construction management expertise.

Share Buyback Program

Repurchased approximately 4.1 million shares for $7.4 million, at an average price of $1.83 per share, representing a 20% discount to book value.

Strong Financial Position

Ended the quarter with over $44 million in cash available to facilitate continued growth across asset management platforms.

High Returns on Investments

GECC declared a special cash distribution of $0.05 per share, driven by the portfolio's strong income generation throughout '24.

Lowlights

Adjusted EBITDA Decline

Adjusted EBITDA for the quarter decreased to $1.3 million from $1.7 million in the prior year period.

Unrealized Losses on Investments

Although a reversal occurred this quarter, there remains an aggregate net unrealized loss of approximately $300,000.

Company Guidance

During the fiscal second quarter of 2025, Great Elm Group achieved significant growth, with a 24% year-over-year increase in total revenue to $3.5 million and a 17% rise in fee-paying assets under management (AUM) to approximately $538 million. The company's strategic moves included launching Monomoy Construction Services through the acquisition of Greenfield CRE and raising $13.2 million in equity for Great Elm Capital Corp (GECC), contributing to a 40% increase in GECC's fee-paying AUM. GECC also announced a 5.7% increase in its quarterly base distribution and declared a special cash distribution due to strong income generation. Great Elm Group ended the quarter with a robust cash position of over $44 million and continued to enhance shareholder value through share repurchases and unique investment opportunities, maintaining a strong balance sheet to support future growth initiatives.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.