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WhiteHorse (WHF)
NASDAQ:WHF

WhiteHorse (WHF) AI Stock Analysis

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WhiteHorse

(NASDAQ:WHF)

Rating:67Neutral
Price Target:
WhiteHorse's overall stock score reflects a solid financial foundation with strong cash flow and no debt. However, challenges such as revenue fluctuations, declining asset values, and mixed earnings call outcomes present risks. The technical analysis and valuation suggest some caution due to potential overbought conditions and a moderately high P/E ratio, balanced by an attractive dividend yield. The stock remains a stable income investment, but with areas needing stabilization and growth.
Positive Factors
Leverage and Asset Management
WhiteHorse Finance has room to add $60M of assets to the portfolio if it makes economic sense for shareholders.
Liquidity Position
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.
Performance Track Record
WHF has a historically strong track record of turnaround performance, and a 'failed restructuring' is an unusual event.
Negative Factors
Credit Concerns
Non-accruals at cost and fair value have increased, indicating potential financial instability.
Dividend Concerns
Elevated credit concerns in the near-term and a base dividend that is no longer earnable throughout the forecast period for 2025.
Earnings Results
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. SPDR S&P 500 ETF (SPY)

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 Earnings Call Summary

Earnings Call Date:May 12, 2025
(Q1-2025)
|
% Change Since: 2.01%|
Next Earnings Date:Aug 06, 2025
Earnings Call Sentiment Negative
The earnings call presented a challenging quarter for WhiteHorse Finance, with significant declines in net investment income, NAV per share, and increased non-accrual investments impacting financial performance. However, the company maintained steady capital deployments, cash resources, and continued its streak of quarterly distributions. The sentiment reflects the negative trends outweighing the positive aspects.
Q1-2025 Updates
Positive Updates
Gross Capital Deployments
WhiteHorse Finance achieved gross capital deployments of $45.5 million in Q1 2025, which was partially offset by total repayments and sales of $19.4 million, resulting in net deployments of $26.1 million.
STRS JV Portfolio Performance
The STRS JV portfolio had an aggregate fair value of $310.2 million at the end of Q1 2025, with an average effective yield of 10.8%.
Cash Resources and Credit Facility
The company had cash resources of approximately $19.6 million at the end of Q1 2025, including $8.2 million in restricted cash and approximately $165 million of undrawn capacity available under the revolving credit facility.
First Quarter Distribution
WhiteHorse Finance announced a first quarter distribution of $0.385 per share, consistent with the prior quarter, marking the 51st consecutive quarterly distribution since the IPO in December 2012.
Negative Updates
Decline in Net Investment Income
GAAP net investment income and core NII was $6.8 million or $0.294 per share in Q1 2025, down from $8 million or $0.343 per share in the previous quarter.
Decrease in NAV Per Share
NAV per share at the end of Q1 2025 was $12.11, representing an approximate 1.6% decrease from the prior quarter.
Net Realized and Unrealized Losses
The portfolio was impacted by net realized losses and net markdowns totaling $2.6 million in Q1 2025.
Increase in Non-Accrual Investments
Non-accrual investments totaled 8.8% of the debt portfolio in Q1 2025, up from 7.2% in the prior quarter, with MSI Information Services placed on non-accrual.
Decreased Yield on Debt Investments
The weighted average effective yield on income-producing debt investments decreased to 12.1% at the end of Q1 2025, compared to 12.5% in the previous quarter.
Company Guidance
During the WhiteHorse Finance first quarter 2025 earnings call, CEO Stuart Aronson and CFO Joyson Thomas discussed the company's financial performance and provided guidance for future activities. The first quarter results were disappointing, with GAAP net investment income and core net investment income (NII) of $6.8 million, or $0.294 per share, falling short of the quarterly distribution of $0.385 per share. This was a decrease from the Q4 GAAP and core NII of $8 million, or $0.343 per share. Net asset value (NAV) per share declined by 1.6% to $12.11, impacted by net realized losses and markdowns totaling $2.6 million. The portfolio saw gross capital deployments of $45.5 million, offset by $19.4 million in repayments and sales, resulting in net deployments of $26.1 million. The weighted average effective yield on income-producing debt investments decreased to 12.1% from 12.5% in the previous quarter. Non-accrual investments rose to 8.8% of the debt portfolio from 7.2%, affecting the earnings power of the business development company (BDC). The STRS JV portfolio had an aggregate fair value of $310.2 million with an average effective yield of 10.8%. The company is managing challenges related to tariff risks and is focused on diversifying its investments to maintain stability. The board is actively evaluating the quarterly distribution, taking into account the core earnings power and market conditions.

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
75
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
70
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
80
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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue70.56M17.09M103.26M21.35M35.35M36.02M
Gross Profit54.27M17.09M103.26M-1.99M13.17M15.25M
EBITDA37.79M11.97M0.0036.05M46.33M44.72M
Net Income11.83M10.85M20.41M15.68M30.09M31.68M
Balance Sheet
Total Assets678.77M676.82M730.75M796.47M851.02M718.99M
Cash, Cash Equivalents and Short-Term Investments19.33M26.97M10.75M660.04M12.19M8.06M
Total Debt0.00353.12M386.76M441.25M476.80M384.88M
Total Liabilities397.32M390.69M413.98M464.09M501.27M406.09M
Stockholders Equity281.45M286.13M316.77M332.39M349.75M312.90M
Cash Flow
Free Cash Flow31.27M78.76M90.37M71.99M-90.19M-64.60M
Operating Cash Flow31.27M78.76M90.37M71.99M-90.19M-64.60M
Investing Cash Flow180.75M0.000.00323.08M423.63M213.79M
Financing Cash Flow-71.47M-75.40M-92.13M-68.49M97.01M52.98M

WhiteHorse Technical Analysis

Technical Analysis Sentiment
Positive
Last Price9.13
Price Trends
50DMA
8.88
Positive
100DMA
9.14
Negative
200DMA
9.42
Negative
Market Momentum
MACD
0.03
Negative
RSI
62.91
Neutral
STOCH
79.59
Neutral
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 9.13 is above the 20-day moving average (MA) of 8.82, above the 50-day MA of 8.88, and below the 200-day MA of 9.42, indicating a neutral trend. The MACD of 0.03 indicates Negative momentum. The RSI at 62.91 is Neutral, neither overbought nor oversold. The STOCH value of 79.59 is Neutral, 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 (67)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
75
Outperform
$233.22M11.828.67%13.31%
69
Neutral
$139.96M19.883.63%15.48%127.09%2519.30%
67
Neutral
$17.01B11.909.70%3.76%11.63%-9.47%
WHWHF
67
Neutral
$212.21M23.203.07%16.87%-27.52%-46.85%
67
Neutral
$320.06M6.3718.18%6.25%21.99%23.40%
SCSCM
64
Neutral
$410.33M10.1010.83%11.08%17.67%128.48%
59
Neutral
$282.84M7.5910.68%17.07%22.53%
* Financial Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
WHF
WhiteHorse
9.13
-1.27
-12.21%
NEWT
Newtek Business
12.15
0.05
0.41%
SCM
Stellus Capital
14.44
2.07
16.73%
TPVG
TriplePoint Venture Growth
7.03
0.21
3.08%
MRCC
Monroe Capital
6.46
-0.07
-1.07%
LIEN
Chicago Atlantic BDC
10.22
-0.07
-0.68%

WhiteHorse Corporate Events

Financial Disclosures
WhiteHorse to Release Q1 2025 Financial Results
Neutral
Apr 28, 2025

On April 28, 2025, WhiteHorse Finance, Inc. announced that it will release its first quarter financial results for the period ended March 31, 2025, on May 12, 2025. The company will discuss these results during a conference call on May 13, 2025, which will be accessible via teleconference and webcast. This announcement is significant for stakeholders as it provides insights into the company’s financial performance and strategic direction.

Spark’s Take on WHF Stock

According to Spark, TipRanks’ AI Analyst, WHF is a Neutral.

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.

To see Spark’s full report on WHF stock, click here.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: May 01, 2025