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Hennessy Advisors, Inc. 4.875% Notes due 2026 (HNNAZ)

Company Dividend Discount ModelIndustry: Asset ManagementSector: Financial Services

Valuation Snapshot

Stable Growth$8.90 - $12.81$10.81
Multi-Stage$14.26 - $15.67$14.95
Blended Fair Value$12.88
Current Price$10.45
Upside23.24%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2025202420232022202120202019201820172016
DPS0.00%0.00%0.000.000.520.510.500.500.450.360.280.19
YoY Growth---100.00%-99.80%1.56%1.69%0.13%12.09%22.75%30.45%47.33%8.46%
Dividend Yield--0.00%0.01%7.73%6.08%4.71%5.89%4.44%3.64%1.69%0.90%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)9.96
(-) Cash Dividends Paid (M)2.10
(=) Cash Retained (M)7.86
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)1.991.250.75
Cash Retained (M)7.867.867.86
(-) Cash Required (M)-1.99-1.25-0.75
(=) Excess Retained (M)5.876.617.11
(/) Shares Outstanding (M)7.917.917.91
(=) Excess Retained per Share0.740.840.90
LTM Dividend per Share0.270.270.27
(+) Excess Retained per Share0.740.840.90
(=) Adjusted Dividend1.011.101.17
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate-2.00%-1.00%0.00%
Fair Value$8.90$10.81$12.81
Upside / Downside-14.84%3.41%22.56%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)9.969.869.769.669.579.479.76
Payout Ratio21.11%34.89%48.67%62.45%76.22%90.00%92.50%
Projected Dividends (M)2.103.444.756.037.298.529.02

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate-2.00%-1.00%0.00%
Year 1 PV (M)3.123.153.19
Year 2 PV (M)3.913.994.07
Year 3 PV (M)4.514.654.79
Year 4 PV (M)4.945.155.36
Year 5 PV (M)5.245.525.80
PV of Terminal Value (M)91.0195.75100.69
Equity Value (M)112.74118.21123.89
Shares Outstanding (M)7.917.917.91
Fair Value$14.26$14.95$15.67
Upside / Downside36.45%43.07%49.95%

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