NYSE:WHG
WESTWOOD HOLDINGS GROUP INC
A real estate-focused investment holding group generating cash flow from property assets and joint ventures with a current market cap implied by $122.3M in equity.
Key Metrics
Investment Thesis
Bull Case
Investors may consider the stock due to its robust operating cash flow of $21.1M which supports dividend payments of $5.4M, a diversified asset base including $39.5M in goodwill indicating established brand value, and potential for growth through its joint venture investments totaling $4.2M.
Bear Case
The stock faces headwinds from declining profitability with net income dropping significantly in the most recent year, substantial debt service obligations reflected in high treasury stock holdings, and a history of negative cash flow changes suggesting capital return challenges to shareholders.
About WESTWOOD HOLDINGS GROUP INC
Westwood Holdings Group Inc. is a diversified investment holding company primarily focused on real estate development and management operations. The firm serves residential and commercial markets through its portfolio of properties and strategic asset investments. Key revenue drivers include rental income, property sales, and returns from its joint venture partnerships.
Analysis
Management Discussion
The company demonstrated revenue growth from $68.7M in 2022 to $94.7M in 2024, though net income volatility remains a concern as profits dropped from $10.6M in 2023 to $2.2M in 2024. Strong operational cash flow of $21.1M contrasts with a net change in cash of -$1.6M, primarily driven by significant financing outflows of $-18.1M and other financing activities of $-24.9M.
Industry Overview
The real estate investment trust and holding sector is currently characterized by consolidation and a shift towards operational asset management. Companies in this space are balancing high fixed costs against variable rental income streams while navigating changing interest rate environments that impact refinancing costs for their property portfolios.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Revenue | $68.7M | $89.8M | $94.7M |
| Cost of Revenue | $0 | $0 | $0 |
| Gross Profit | $68.7M | $89.8M | $94.7M |
| Operating Expenses | $73.6M | $83.8M | $93.9M |
| Operating Income | $-4.9M | $6.0M | $830.0K |
| G&A | $9.1M | $12.5M | $11.9M |
| Marketing | $2.0M | $3.0M | $2.7M |
| Stock-Based Comp | $6.0M | $6.5M | $5.5M |
| D&A | $2.6M | — | — |
| Depreciation | $687.0K | $670.0K | $602.0K |
| Amortization | $1.9M | $4.1M | $4.1M |
| Other OpEx | $62.5M | $68.3M | $79.3M |
| Non-Operating Income | $-322.0K | $7.4M | $3.2M |
| Pre-Tax Income | $-5.2M | $13.4M | $4.0M |
| Income Tax | $-567.0K | $2.9M | $1.8M |
| Continuing Ops | $-4.6M | $10.6M | $2.2M |
| Discontinued Ops | $0 | $0 | $0 |
| Net Income | $-4.6M | $10.6M | $2.2M |
| Minority Interest | $0 | $1.1M | $-4.0K |
| Net to Common | $-4.6M | $9.5M | $2.2M |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Current Assets | $58.2M | $72.2M | — |
| Cash & Equivalents | $23.9M | $20.4M | $18.8M |
| Marketable Securities | $15.3M | $32.7M | $27.7M |
| Other Current Assets | $19.0M | $19.1M | — |
| Long-Term Assets | $88.2M | $82.9M | — |
| PP&E (Net) | $1.8M | $1.4M | $951.0K |
| Goodwill | $35.7M | $39.5M | $39.5M |
| Operating Leases | $5.0M | $3.7M | $2.6M |
| LT Investments | $4.5M | $7.2M | — |
| Other LT Assets | $34.7M | $26.8M | — |
| Total Assets | $146.4M | $155.2M | $150.0M |
| Current Liabilities | $17.6M | $18.6M | — |
| Current Leases | $1.5M | $1.3M | $3.2M |
| Taxes Payable | $0 | — | — |
| Other Current Liab | $14.4M | $15.7M | — |
| Long-Term Liabilities | $18.2M | $14.1M | — |
| LT Operating Leases | $4.6M | $3.3M | — |
| Other LT Liab | $13.6M | $10.8M | — |
| Total Liabilities | $35.8M | $32.7M | $27.7M |
| Shareholders' Equity | $110.6M | $122.4M | $122.3M |
| Retained Earnings | $-4.3M | $4.7M | $6.2M |
| Treasury Stock | $85.1M | $86.0M | $88.3M |
| Total L&E | $146.4M | $155.2M | $150.0M |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Net Income (CFO) | $-4.6M | $10.6M | $2.2M |
| Non-Cash Adjustments | $103.6M | $-25.9M | $21.9M |
| Working Capital Changes | $-47.5M | $14.1M | $-3.0M |
| Cash from Operations | $51.5M | $-1.2M | $21.1M |
| Capital Expenditures | $320.0K | $147.0K | $109.0K |
| Cash from Investing | $-33.7M | $4.1M | $-4.6M |
| Share Buybacks | $2.9M | $0 | $1.3M |
| Dividends Paid | $5.6M | $5.5M | $5.4M |
| Cash from Financing | $-9.1M | $-6.4M | $-18.1M |
| FX Effect | $5.0K | $0 | $0 |
| Net Change in Cash | $8.7M | $-3.4M | $-1.6M |
| Beginning Cash | $15.2M | $23.9M | $20.4M |
| Ending Cash | $23.9M | $20.4M | $18.8M |
Frequently Asked Questions
How does WESTWOOD HOLDINGS GROUP INC make money?
Real Estate Development and Leasing, Joint Venture Investments, and Property Sales. The company's revenue structure is heavily influenced by its $94.7M gross profit derived from property operations, while non-operating income of $3.2M suggests additional investment returns or asset disposals contribute to the bottom line.
What are the main risks for WHG?
High leverage indicated by a treasury stock balance of $88.3M against total equity, sensitivity to real estate market cycles affecting rental demand, potential volatility from non-operating income fluctuations, and the impact of interest rate changes on their $27.7M in liabilities.
What is WHG's competitive advantage?
Significant equity base of $122.3M providing financial flexibility for acquisitions, substantial marketable securities holdings of $27.7M offering liquidity buffers, and a strong operating cash flow generation of $21.1M relative to its net profit margins.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.