WhiteHorse (WHF) AI Stock Analysis

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WhiteHorse

(NASDAQ:WHF)

69Neutral

WhiteHorse's financial performance is strong, with no debt and consistent cash flow generation. However, revenue and asset fluctuations indicate potential volatility. Technical indicators suggest neutral momentum, while valuation metrics present a mixed picture with an attractive but possibly risky dividend yield. The recent earnings call revealed some operational challenges, notably in NAV and nonaccrual investments, which temper the overall outlook.

Positive Factors

Liquidity

Management estimates it has $194.1M of liquidity at quarter-end, consisting of $20.7M in cash and $173.4M in funds available under existing credit facility commitments.

Negative Factors

Credit Concerns

Non-accruals total $57.0M cost and $34.2M fair value, which is up from the previous quarter.

Financial Performance

In 3Q24, WhiteHorse Finance lost $0.30/share for a -9.0% ROE as it generated net losses of $16.0M, primarily from markdowns.

WhiteHorse (WHF) vs. S&P 500 (SPY)

Market Cap

$227.32M

Dividend Yield15.75%

Average Volume (3M)116.51K

Price to Earnings (P/E)21.0

Beta (1Y)0.42

Revenue Growth-27.52%

EPS Growth-46.85%

CountryUS

Employees3

SectorFinancial

Sector Strength81

IndustryAsset Management

Share Statistics

EPS (TTM)0.47

Shares Outstanding23,243,088

10 Day Avg. Volume115,001

30 Day Avg. Volume116,508

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)N/A

Price to Cash Flow (P/CF)2.70

P/FCF Ratio2.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$10.00

Price Target Upside2.15% Upside

Rating ConsensusModerate Sell

Number of Analyst Covering2

WhiteHorse Business Overview & Revenue Model

Company DescriptionWhiteHorse Finance, Inc. is business development company, non-diversified, closed end management company specializing in originating senior secured loans, lower middle market, growth capital industries. It prefers to invest in United States. It typically invests between $5 million to $25 million in companies having enterprise value of between $50 million and $350 million.

How the Company Makes MoneyWhiteHorse Finance makes money through the interest and fees generated from the loans it extends to small and middle-market businesses. The company earns interest income from its loan portfolio, which typically consists of senior secured loans that offer a favorable risk-return profile. Additionally, WHF may generate revenue through equity investments in certain portfolio companies, which can provide capital appreciation and dividend income. The company benefits from its strategic partnerships with other financial institutions and sponsors, which can enhance deal flow and investment opportunities. Furthermore, WhiteHorse Finance's focus on maintaining a diversified portfolio helps mitigate risk and stabilize earnings.

WhiteHorse Financial Statement Overview

Summary

WhiteHorse demonstrates a robust financial performance with strong cash flow generation and no debt burdens. However, fluctuations in revenue and asset values suggest volatility in business operations, which could pose challenges. The company's strength lies in its ability to manage costs and maintain profitability, supported by its strong cash position. Going forward, stabilizing revenue streams and asset growth will be key areas to address.

Income Statement

Positive

WhiteHorse has shown strong revenue growth over recent years with a significant increase in EBIT margins. The gross profit margin remains at 100% due to the nature of its asset management business. However, the recent dip in revenue in 2024 compared to 2023 may indicate a fluctuation in revenue streams. The net profit margin is robust, reflecting effective cost management despite revenue volatility.

Balance Sheet

Positive

The balance sheet is solid with no total debt as of 2024, highlighting financial stability. The equity ratio is healthy, ensuring that a substantial part of assets is funded by equity rather than liabilities. However, there was a decrease in total assets over the years, and the return on equity has been fluctuating, indicating potential concerns about consistent profitability.

Cash Flow

Positive

Operating cash flow has been positive and consistent, supporting strong free cash flow figures. The company has managed to improve its operating cash flow to net income ratio, showcasing effective cash generation from operations. Despite considerable fluctuations in investing and financing cash flows, free cash flow growth remains positive, ensuring liquidity and operational efficiency.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
92.82M	103.26M	21.35M	35.35M	36.02M
	Gross Profit
92.82M	103.26M	-1.99M	13.17M	15.25M
	EBIT
87.69M	73.59M	60.22M	31.10M	32.43M
	EBITDA
0.00	0.00	36.05M	46.33M	44.72M
	Net Income Common Stockholders
10.85M	20.41M	15.68M	30.09M	31.68M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
26.97M	10.75M	660.04M	12.19M	8.06M
	Total Assets
676.82M	730.75M	796.47M	851.02M	718.99M
	Total Debt
0.00	386.76M	441.25M	476.80M	384.88M
	Net Debt
-26.97M	-10.75M	431.74M	464.61M	376.82M
	Total Liabilities
390.69M	413.98M	464.09M	501.27M	406.09M
	Stockholders Equity
286.13M	316.77M	332.39M	349.75M	312.90M
Cash Flow		Free Cash Flow
78.76M	90.37M	71.99M	-90.19M	-64.60M
	Operating Cash Flow
78.76M	90.37M	71.99M	-90.19M	-64.60M
	Investing Cash Flow
0.00	0.00	323.08M	423.63M	213.79M
	Financing Cash Flow
-75.40M	-92.13M	-68.49M	97.01M	52.98M

WhiteHorse Technical Analysis

Technical Analysis Sentiment

Positive

Last Price9.79

Price Trends

50DMA

9.80

Positive

100DMA

9.76

Positive

200DMA

10.11

Negative

Market Momentum

MACD

>-0.01

Negative

RSI

58.79

Neutral

STOCH

92.48

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WHF, the sentiment is Positive. The current price of 9.79 is above the 20-day moving average (MA) of 9.37, below the 50-day MA of 9.80, and below the 200-day MA of 10.11, indicating a neutral trend. The MACD of >-0.01 indicates Negative momentum. The RSI at 58.79 is Neutral, neither overbought nor oversold. The STOCH value of 92.48 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for WHF.

WhiteHorse Risk Analysis

WhiteHorse disclosed 106 risk factors in its most recent earnings report. WhiteHorse 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

WhiteHorse Peers Comparison

Overall Rating

UnderperformOutperform

Sector (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
LIEN	75 Outperform	$234.59M	11.05	4.98%	11.41%	―	―
WHF	69 Neutral	$227.32M	20.95	3.60%	15.75%	-27.52%	-46.85%
MRCC	69 Neutral	$158.27M	16.31	4.91%	13.85%	127.09%	2519.30%
SCM	64 Neutral	$353.90M	7.18	13.29%	12.22%	17.67%	128.48%
Sector *	63 Neutral	$12.33B	9.59	8.02%	79.26%	12.87%	-4.61%
TPVG	59 Neutral	$240.02M	7.30	9.26%	21.56%	22.53%	―
NEWT	56 Neutral	$273.95M	5.33	18.65%	7.15%	33.15%	18.48%

* Financial Sector Average

Performance Comparison

WHF

WhiteHorse

9.79

-1.15

-10.51%

NEWT

Newtek Business

10.86

0.65

6.37%

SCM

Stellus Capital

13.17

0.68

5.44%

TPVG

TriplePoint Venture Growth

6.18

-1.80

-22.56%

MRCC

Monroe Capital

7.30

0.86

13.35%

LIEN

Chicago Atlantic BDC

10.59

0.51

5.06%

WhiteHorse Earnings Call Summary

Earnings Call Date: Mar 7, 2025 | % Change Since: -3.26% | Next Earnings Date: May 13, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed picture of WhiteHorse Finance's performance. While the company maintained strong capital deployment and portfolio structure, along with stable distributions and cash resources, it faced challenges with a decline in NAV, increased nonaccrual investments, and reduced net investment income and yields.

Highlights

Successful Capital Deployment

Gross capital deployments of $35.4 million in Q4, including six new originations totaling $27.4 million, and $8 million for add-ons to existing investments.

Strong Portfolio Structure

98.4% of the debt portfolio was first lien, senior, and secured, with a mix of approximately two-thirds sponsor and one-third non-sponsor.

Continued Distribution Stability

Declared a first-quarter distribution of $0.385 per share, maintaining consistency with previous quarters.

JV Portfolio Stability

The STR SJV's portfolio had an aggregate fair value of $295 million with an average effective yield of 11.1%.

Cash Resources and Credit Facility

Cash resources of $27.8 million at the end of Q4, with approximately $173 million of undrawn capacity available under a revolving credit facility.

Lowlights

Decline in Net Asset Value

NAV per share decreased by approximately 3.6% from the prior quarter, impacted by net realized losses and markdowns totaling $4.9 million.

Increase in Nonaccrual Investments

Nonaccrual investments totaled 7.2% of the debt portfolio, up from 6.5% in the prior quarter, with significant markdowns in American Crafts and Aspect Software.

Decrease in Weighted Average Effective Yield

The weighted average effective yield on income-producing debt investments decreased to 12.5% from 13.1% in Q3, and on the overall portfolio from 10.6% to 10.2%.

Lower Net Investment Income

Q4 GAAP net investment income was $8 million or $0.34 per share, down from $9.2 million or $0.394 per share in Q3.

Company Guidance

During the WhiteHorse Finance Fourth Quarter 2024 Earnings Conference Call, the company provided detailed financial guidance and performance metrics. The Q4 GAAP net investment income (NII) and core NII were reported at $8 million or $0.34 per share, slightly below the Q3 figure of $9.2 million or $0.394 per share. The net asset value (NAV) per share decreased by approximately 3.6% quarter-over-quarter to $12.31, influenced by a $0.245 special dividend and $4.9 million in net realized losses and markdowns in the portfolio. Gross capital deployments amounted to $35.4 million, offset by total repayments and sales of $46.2 million, resulting in net repayments of $10.8 million. The portfolio's weighted average effective yield on income-producing debt investments decreased from 13.1% in Q3 to 12.5% in Q4. Nonaccrual investments rose to 7.2% of the debt portfolio, a reflection of challenges in specific investments like American Crafts and Aspect Software. The company continues to focus on non-sponsor markets due to attractive risk returns and less competition, expecting high repayment activity in 2025, while maintaining a solid pipeline with approximately 170 deals.

WhiteHorse Corporate Events

Financial Disclosures

WhiteHorse to Announce 2024 Financial Results in March

Neutral

Feb 3, 2025

WhiteHorse Finance, Inc. announced on February 3, 2025, that it will release its fourth quarter and full year financial results for the year ending December 31, 2024, on March 7, 2025. The company will discuss these results in a conference call on the same day, providing stakeholders insights into its performance and strategic positioning within the industry.

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.