B. Riley Financial (RILY): Evaluating Valuation After a Sharp Earnings Rebound and Profitability Turnaround

B. Riley Financial (RILY) just swung from a huge loss to solid profitability in its latest second quarter report, with revenue more than doubling and earnings per share flipping sharply back into positive territory.

See our latest analysis for B. Riley Financial.

The strong earnings rebound comes after a volatile stretch, with a sharp 1 day share price return of minus 17.5 percent and a 90 day share price return of minus 34.1 percent. The 3 year total shareholder return of minus 84.4 percent shows that long term confidence still needs rebuilding even as near term momentum looks tentative.

If this turnaround story has your attention, it could be a good moment to scan the market for other potential rebounds and discover fast growing stocks with high insider ownership.

With earnings rebounding but multi year returns still deeply negative and the stock trading at a steep intrinsic discount, is B. Riley Financial quietly undervalued today, or is the market already pricing in the next leg of growth?

Price to Sales of 0.2x: Is It Justified?

B. Riley Financial closed at $4.72, and on a price to sales basis the stock looks extremely cheap versus peers and the broader Capital Markets industry.

The preferred multiple here is the price to sales ratio, which compares the company’s market value with the revenue it generates. For a diversified financial services group with volatile earnings and negative equity, sales based valuation can sometimes be a cleaner lens than profit based metrics.

RILY trades on a price to sales ratio of just 0.2 times, while its closest peers average 17.2 times and the wider US Capital Markets industry sits at 3.8 times. That is a dramatic discount and suggests the market is heavily discounting the durability, quality and risk profile of those revenues, even as our DCF work also flags the stock as deeply undervalued versus an estimated fair value of $154.14.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price to Sales of 0.2x (UNDERVALUED)

However, investors still face meaningful risks, including RILY’s history of steep shareholder losses and structurally volatile earnings across its diversified and sometimes cyclical businesses.

Find out about the key risks to this B. Riley Financial narrative.

Another View: SWS DCF Points to Even Deeper Value

Our DCF model paints an even starker picture, suggesting fair value around $154.14 versus today’s $4.72 share price. That implies RILY could be significantly undervalued if cash flows normalize, but also raises a hard question: is the market pricing in risks the model cannot fully capture?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out B. Riley Financial for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 913 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own B. Riley Financial Narrative

If you see the numbers differently or want to stress test our assumptions against your own, you can build a personalized narrative in just a few minutes: Do it your way.

A great starting point for your B. Riley Financial research is our analysis highlighting 1 key reward and 3 important warning signs that could impact your investment decision.

Ready for your next investing move?

Before you move on, scan fresh opportunities on the Simply Wall St Screener so you can stay updated on potential standout ideas.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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