| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 29.96 | 74 |
| Intrinsic value (DCF) | 3.85 | -78 |
| Graham-Dodd Method | n/a | |
| Graham Formula | 1356.73 | 7761 |
B. Riley Financial, Inc. (NASDAQ: RILYT) is a diversified financial services firm offering a broad range of capital markets, wealth management, financial consulting, and liquidation services. Headquartered in Los Angeles, California, the company operates through multiple segments, including Capital Markets, Wealth Management, Financial Consulting, Auction and Liquidation, Communications, and Consumer. B. Riley serves corporate, institutional, and high-net-worth clients with tailored financial solutions, including investment banking, restructuring advisory, and retail liquidation. The firm also owns subsidiaries like Targus and a portfolio of consumer brands, diversifying its revenue streams. Operating in the competitive financial services sector, B. Riley differentiates itself through its integrated advisory and capital markets expertise, catering to both distressed and growth-oriented businesses. Despite macroeconomic headwinds, the company maintains a strong liquidity position, with $231.96 million in cash and equivalents as of FY 2023. Investors should note that RILYT represents the company’s 6.00% Senior Notes due 2028, offering fixed-income exposure to B. Riley’s credit profile.
B. Riley Financial’s investment appeal lies in its diversified financial services model, which spans capital markets, restructuring advisory, and asset liquidation. However, FY 2023 saw a net loss of $99.91 million and negative diluted EPS of -$3.69, reflecting challenges in profitability. The company’s high total debt of $2.45 billion against a market cap of $99.36 million raises leverage concerns, though its senior notes (RILYT) offer a fixed 6.00% yield. Operating cash flow of $24.5 million suggests some liquidity resilience, but investors should weigh the risks of cyclical downturns in advisory and liquidation demand. The dividend payout ($1.50/share) may attract income-focused investors, but sustainability depends on improved earnings. B. Riley’s niche in restructuring and liquidation could benefit from economic volatility, but its debt load and sector competition pose material risks.
B. Riley Financial competes in a fragmented financial services landscape, differentiating itself through integrated advisory and capital markets capabilities. Its Capital Markets segment competes with boutique investment banks, offering specialized services like restructuring and forensic accounting—a niche where it rivals firms like Houlihan Lokey (HLI). The Wealth Management division faces pressure from larger players (e.g., LPL Financial) but benefits from cross-selling opportunities with high-net-worth clients. The Auction and Liquidation segment competes with Hilco Global, leveraging B. Riley’s operational expertise in distressed retail. However, the company’s smaller scale compared to conglomerates like Jefferies (JEF) limits its ability to underwrite large deals. A key competitive advantage is its multidisciplinary approach, combining advisory with capital solutions, though its high debt load may constrain flexibility. The Communications and Consumer segments (e.g., Targus) add diversification but operate outside core financial services, exposing the firm to unrelated market risks. B. Riley’s restructuring focus positions it well in economic downturns, but reliance on cyclical demand and leveraged balance sheet are critical vulnerabilities.