Breaking Down Westwood Holdings Group, Inc. (WHG) Financial Health: Key Insights for Investors

You're looking at Westwood Holdings Group, Inc. (WHG) and trying to figure out if their recent performance is a true turnaround or just a market blip, and the Q3 2025 data gives us a clear answer: the platform is stabilizing and showing real earnings power. The headline is that the firm is defintely moving past its prior struggles, posting $3.7 million in net income for the third quarter, a massive leap from the $0.1 million reported in the same quarter last year. This solid result was driven by quarterly revenues hitting $24.3 million and a total firmwide Assets Under Management (AUM) and advisement figure of $18.3 billion as of September 30, 2025. The near-term opportunity is clear: with $39.2 million in cash and no debt, their balance sheet is rock-solid, positioning them to capitalize on the market's broadening beyond mega-cap growth stocks, especially as their new exchange-traded funds (ETFs) gain traction and their value strategies outperform. So, the question isn't about survival anymore; it's about how you position your portfolio to capture the next leg of their growth story.

Revenue Analysis

You need a clear picture of where Westwood Holdings Group, Inc. (WHG)'s money comes from, especially with the market's recent volatility. The direct takeaway is that while the firm's overall revenue growth is moderate, the strategic shift toward higher-fee products like ETFs and private funds is starting to pay off, offsetting outflows in traditional, lower-fee strategies.

For the trailing twelve months (TTM) ending September 30, 2025, Westwood Holdings Group, Inc.'s total revenue was a solid $96.24 million. This figure represents a year-over-year growth rate of 4.2%, which is a respectable, if not spectacular, pace in the competitive asset management space. More recently, the third quarter of 2025 (Q3 2025) reported revenue of $24.3 million, showing a sequential lift from the prior quarter and a year-over-year increase of about 2.4% compared to Q3 2024. That's steady, but not explosive growth.

Primary Revenue Streams and Segment Contribution

Westwood Holdings Group, Inc.'s revenue is primarily generated through advisory fees charged on its Assets Under Management (AUM) and Assets Under Advisement (AUA), segmented into Advisory and Trust services. The real story is in the mix of those assets, because different client types pay different fee rates. Here's the quick math on where the assets-and thus the revenue potential-sit as of Q3 2025, when total AUM/AUA was $18.3 billion:

• Institutional: $9.0 billion (52% of AUM).
• Wealth Management: $4.3 billion (25% of AUM).
• Mutual Funds/ETFs: $4.0 billion (23% of AUM).

The institutional segment is the largest, but the Wealth Management and Mutual Funds/ETFs are defintely key for margin expansion due to their typically higher fee structures. You want to see growth here.

Shifting Revenue Dynamics: The ETF and Private Fund Push

The significant change in Westwood Holdings Group, Inc.'s revenue streams isn't just about total AUM, but the quality of the assets. The firm is actively diversifying its product mix to capture higher-margin revenue. This is a smart move to combat the industry-wide fee compression (lower average fees) that plagues legacy strategies.

The firm's strategic expansion into exchange-traded funds (ETFs) and private fund strategies is a clear signal of this shift.

• The MDST ETF reached $150 million in assets and captured a notable 30% of midstream ETF flows in September 2025.
• A partnership with WEBs launched eleven new Defined Volatility sector ETFs, broadening the product suite.
• Private fund strategies have already surpassed their annual fundraising goal for 2025.

What this estimate hides, however, is the pressure on the traditional business: the firm experienced net outflows of $0.7 billion in AUM during Q3 2025, which were concentrated in its lower-fee large-cap products. This means the revenue growth you see is a result of market appreciation and new, higher-fee products successfully offsetting a decline in the core, lower-fee business. For more on the strategic direction driving these product launches, you should check out the Mission Statement, Vision, & Core Values of Westwood Holdings Group, Inc. (WHG).

Profitability Metrics

You're looking at Westwood Holdings Group, Inc. (WHG) and asking the right question: is this asset manager actually making money, and is it doing so efficiently? The direct takeaway for the third quarter of 2025 is a sharp jump in bottom-line profit, but you need to look closer at the operational engine to understand the true trend.

In Q3 2025, Westwood Holdings Group, Inc. reported total revenues of $24.289 million. The resulting Net Profit Margin for the quarter was a strong 15.35%, calculated from the $3.729 million in net income. To be fair, this net income received a temporary boost from a non-operating unrealized appreciation on private investments, which is a good-to-have but not a core, repeatable revenue stream.

Here's the quick math on the core operational profitability:

• Operating Profit (Net Operating Income) for Q3 2025: $2.009 million
• Operating Profit Margin: 8.27%

This 8.27% Operating Margin is the number that tells you what the core business-managing assets and providing trust services-is generating before one-time gains and taxes. That's a clean one-liner on their operational strength.

Profitability Trends and Operational Efficiency

The trend in profitability throughout 2025 is defintely positive, showing a clear turnaround from prior periods. Net income has increased sequentially across the year, jumping from $0.5 million in Q1 2025 and $1.0 million in Q2 2025 to $3.7 million in Q3 2025. This dramatic increase is a strong signal that management's focus on cost discipline is working, as the firm's net profit margin has climbed to 7.5% from 3% just a year prior, according to recent analysis.

Operational efficiency is visible in the cost management. Total expenses in Q3 2025 were $22.280 million. The leap in Operating Income from $868 thousand in Q2 2025 to $2.009 million in Q3 2025 was driven mostly by higher average Assets Under Management (AUM) flowing into revenue, while total expenses remained relatively flat. This is operating leverage in action: more revenue falling to the bottom line without a proportional rise in costs.

Industry Comparison: A Margin Gap

When you compare Westwood Holdings Group, Inc.'s margins to the broader industry, you see the structural challenge. Asset management firms typically have very high Gross Profit Margins-the industry average sits around 77.5%-because their primary 'Cost of Goods Sold' is low, mostly comprising direct compensation. The real pressure is in the operating expenses, like technology and sales. The median industry Operating Margin was about 32% in 2023, a figure that highlights the ongoing pressure from rising costs and fee compression in 2025.

Westwood Holdings Group, Inc.'s Q3 2025 Operating Margin of 8.27% is well below the industry median, suggesting two things: either their cost base is still too high relative to their current revenue scale, or their revenue yield (the fee they charge on AUM) is significantly lower than peers. The good news is that the firm's valuation, with a Price-to-Earnings (P/E) ratio of 19.3x, is notably below the US Capital Markets industry average of 25.6x, which suggests the market is pricing in this lower profitability.

For a deeper dive into the firm's balance sheet and valuation, you should check out the full analysis at Breaking Down Westwood Holdings Group, Inc. (WHG) Financial Health: Key Insights for Investors.

Next step: Finance: Analyze the composition of the Q3 2025 'Total Expenses' to pinpoint the largest operational cost drivers and identify potential areas for further cost management by month-end.

Debt vs. Equity Structure

You need to know how Westwood Holdings Group, Inc. (WHG) is funding its operations, because a company's capital structure is a direct signal of its risk tolerance and financial flexibility. The direct takeaway here is that Westwood Holdings Group, Inc. operates with an extremely conservative, debt-free balance sheet, which is a significant outlier in the financial sector.

As of the third quarter of 2025, Westwood Holdings Group, Inc. reported that it carries no debt-zero long-term or short-term borrowings. This is a powerful statement of financial health, especially in the volatile asset management industry. Instead of relying on borrowed money, the firm's capital base is entirely supported by its stockholders' equity, which stood at a healthy $123.9 million as of September 30, 2025.

The Debt-to-Equity Anomaly

When we look at the Debt-to-Equity (D/E) ratio, which measures a company's financial leverage by comparing total debt to total equity, Westwood Holdings Group, Inc.'s position is starkly clear. With no debt, the D/E ratio is effectively 0. This means the company is not using financial leverage to amplify returns, but it also means it faces virtually no interest rate risk or principal repayment pressure.

Here's the quick math on how this compares to the industry:

• Westwood Holdings Group, Inc. D/E Ratio (Q3 2025): ~0
• Financials Sector Average D/E, Adjusted: 75.1%

Honestly, a D/E of 0 is almost unheard of for a publicly traded financial services firm. Most of their peers in the Financials sector operate with a significant amount of debt; the sector average D/E, adjusted, is closer to 75.1%. Westwood Holdings Group, Inc.'s capital structure is defintely a source of strength.

Financing Growth: Equity and Cash

The absence of debt means there has been no recent activity in debt issuances, credit ratings, or refinancing. They simply don't need to. This capital structure tells you that Westwood Holdings Group, Inc. finances its growth and operations almost exclusively through retained earnings and equity funding, plus a strong cash position. As of September 30, 2025, the firm held $39.2 million in cash and liquid investments.

What this estimate hides is the potential opportunity cost of not using low-cost debt, but the trade-off is superior balance sheet stability. The firm's strategy is clearly to maintain maximum liquidity and minimize financial risk, which is a major positive for investors concerned about market downturns. This high level of financial independence supports their maintained quarterly cash dividend of $0.15 per share.

If you want to dig deeper into who is actually buying into this debt-free model, you should be Exploring Westwood Holdings Group, Inc. (WHG) Investor Profile: Who's Buying and Why?

Liquidity and Solvency

When you're evaluating an asset management firm like Westwood Holdings Group, Inc. (WHG), liquidity-the ability to meet short-term obligations-is paramount. The good news is that WHG's balance sheet for the 2025 fiscal year, specifically through the third quarter, shows a very healthy liquidity position. The firm is defintely not struggling to cover its near-term bills.

Here's the quick math on their core liquidity positions (in thousands, as of September 30, 2025):

• Current Assets: $55,903
• Current Liabilities: $17,744
• Working Capital: $38,159

The core takeaway is that the company is completely debt-free and holds a substantial buffer of liquid assets.

Current and Quick Ratios: A Strong Buffer

The Current Ratio, which measures current assets against current liabilities, is a great starting point for assessing short-term health. For Westwood Holdings Group, Inc., this ratio is exceptionally strong, meaning they have more than enough liquid assets to cover all their obligations coming due in the next year. You want to see this ratio above 1.0; anything over 2.0 is considered excellent.

The Quick Ratio (or acid-test ratio) is even more telling for a financial services firm, as it excludes less-liquid assets like inventory (which WHG barely has, if any). The quick ratio for Westwood Holdings Group, Inc. is also robust, confirming their highly liquid position. This is a sign of financial discipline, which is what you want from your asset manager.

Cash Flow Statements Overview and Trends

Looking past the balance sheet to the cash flow statement tells you where the money is actually moving. For the nine months ended September 30, 2025, Westwood Holdings Group, Inc. reported a solid cash and liquid investments balance of $39.2 million, which is a key strength. The trend in operating cash flow, however, warrants a closer look.

In the first quarter of 2025, the company reported net cash used in operating activities of $4.9 million. This was largely due to seasonal expenses and payments for compensation and benefits. Still, the fact that the cash and liquid investments balance grew from $26.9 million at the end of Q1 2025 to $39.2 million by the end of Q3 2025 suggests that the firm's cash generation improved significantly in the following quarters.

On the financing side, net cash was consistently used in financing activities, totaling $3.1 million in Q1 2025. This is a healthy use of cash, as it primarily covers the firm's regular cash dividend of $0.15 per share, demonstrating a commitment to returning capital to shareholders.

You can read more about the firm's overall financial health and valuation in our full post: Breaking Down Westwood Holdings Group, Inc. (WHG) Financial Health: Key Insights for Investors

Valuation Analysis

You want to know if Westwood Holdings Group, Inc. (WHG) is a bargain or a trap right now. The quick answer is that, based on key metrics from the 2025 fiscal year, the stock appears undervalued relative to its peers, but you need to understand why the market still applies a discount.

Here's the quick math: Westwood Holdings Group's trailing price-to-earnings (P/E) ratio is sitting around 19.3x as of November 2025. That's a significant discount when you look at the US Capital Markets industry average P/E of 25.6x, and it's miles below the peer group average of 43.6x. This suggests the market is not fully pricing in the company's recent profitability turnaround, which saw year-on-year profit growth of 165.3%.

The other valuation multiples tell a similar story of relative value:

• Price-to-Book (P/B) Ratio: At approximately 1.25, the stock is valued slightly above its book value, which is typical for an asset manager with intangible value like brand and client relationships.
• Enterprise Value-to-EBITDA (EV/EBITDA): This ratio, which looks at the total value of the company (Enterprise Value) against its operating profit (EBITDA), is around 8.2x as of November 2025. For the financial sector, this is a defintely reasonable, lower-end multiple.

The stock is cheap, but you still have to ask if the discount is justified. What this estimate hides is the firm's history of volatility and the nature of its Assets Under Management (AUM) business, which can swing with market cycles.

Stock Trend and Analyst View: A Cautious Buy

Looking at the stock price trend over the last 12 months shows a company trying to find its footing. The stock has traded in a wide range, from a 52-week low of $13.49 to a high of $18.94. As of November 21, 2025, the price was around $16.59. The price has been consolidating, and while short-term technicals are mixed, the longer-term trend suggests a challenging period is potentially ending.

Wall Street analysts are leaning toward a cautious optimism. The consensus rating is a Buy, though it's based on limited recent coverage (one Buy rating). A recent price target is $20.00, but a more cautious view from late October 2025 suggested a Hold with an $18.00 price target. The general takeaway is that the stock has upside potential, but it's not a runaway train. You should also review the firm's strategic direction, which you can read more about here: Mission Statement, Vision, & Core Values of Westwood Holdings Group, Inc. (WHG).

Dividend Sustainability and Payout

For income-focused investors, the dividend is a key part of the total return. Westwood Holdings Group currently pays an annual dividend of $0.60 per share, which translates to a healthy dividend yield of approximately 3.6%. The dividend payout ratio (the percentage of earnings paid out as dividends) is a sustainable 73.2% based on trailing earnings. This ratio is high but still below the 75% threshold, suggesting the dividend is covered by current earnings and is not at immediate risk, especially after the strong Q3 2025 results.

The dividend is stable, but remember that the company has a history of dividend cuts over the past five years, so don't assume growth. This is an income play, not a dividend growth stock.

Next Step: Review the Q3 2025 earnings call transcript to understand the drivers behind the 165.3% profit growth and assess the sustainability of the improved margins.

Risk Factors

You're looking at Westwood Holdings Group, Inc. (WHG) and seeing a strong Q3 2025 earnings report, but as a seasoned analyst, you know the headline numbers often mask the real operational risks. The direct takeaway? While the firm's strategic shift into Exchange-Traded Funds (ETFs) is gaining traction, the core business is still fighting a persistent battle with client outflows, and the recent earnings boost isn't entirely repeatable.

Here's the quick math: Q3 2025 Net Income was $3.7 million, but a significant part of that came from unrealized appreciation on private investments. That's mark-to-model accounting, not recurring revenue, so don't bank on that tailwind in every quarter. The real challenge is organic growth.

The biggest near-term risk is the continued net outflow of assets under management (AUM). In Q3 2025 alone, Westwood Holdings Group, Inc. (WHG) saw net outflows of $0.7 billion. To be fair, this was offset by $0.7 billion in market appreciation, keeping total AUM/AUA at $18.3 billion as of September 30, 2025. Still, relying on the market to bail you out of client redemptions is defintely not a sustainable business model. The outflows were concentrated in lower-fee large-cap strategies, which mitigates the revenue impact, but it signals a lack of stickiness in those traditional products.

The external risks are the same ones hitting all active managers. Increased competition from low-cost passive index funds and fee compression are constant headaches, pressuring margins. Plus, any significant market volatility or economic downturn could impact client investment decisions and, therefore, asset management fees. The regulatory landscape is also a continuous threat, potentially increasing operational and compliance costs.

Westwood Holdings Group, Inc. (WHG) is not just sitting still, though. Their mitigation strategy is clear: diversify the product shelf and leverage their strong balance sheet. The firm is debt-free and holds a robust $39.2 million in cash and liquid investments.

Their strategic actions map to the risks:

• Countering Outflows: Building a new-business pipeline of approximately $1.6 billion, including a $450 million mandate won but not yet funded.
• Fighting Fee Pressure: Aggressively expanding the ETF platform. The MDST ETF reached over $150 million in AUM and captured 30% of September's midstream ETF flows.
• Broadening Reach: Launching 11 new Defined Volatility sector ETFs via a partnership, broadening their risk-managed offerings.

The firm is also nearing access to a major wirehouse platform, which could accelerate ETF adoption and flows in the coming quarters. You can learn more about their long-term focus here: Mission Statement, Vision, & Core Values of Westwood Holdings Group, Inc. (WHG).

What this estimate hides is the execution risk on those new products; the ETF market is crowded. The table below summarizes the core financial health metrics that underpin their ability to weather these risks.

The next concrete step is to monitor the Q4 2025 flow data closely. If the net outflows slow and the ETF platform continues to scale, the strategic pivot is working. If not, the structural risk of AUM decline will remain the primary concern.

Growth Opportunities

You're seeing Westwood Holdings Group, Inc. (WHG) deliver a sharp turnaround in profitability, and you're right to ask if that momentum is sustainable. The direct takeaway is that their future growth isn't reliant on a single blockbuster product; it's being driven by a deliberate, multi-pronged strategy focused on product innovation in Exchange-Traded Funds (ETFs) and expanding their institutional footprint. This shift is working.

Here's the quick math on their recent performance: Q3 2025 revenue hit $24.3 million, up from $23.1 million in Q2 2025, which shows a clear upward trend in their core business. More impressively, the company reported a year-on-year profit growth of 165.3% as of November 2025, dramatically exceeding their five-year annual average growth of 33.3%. You need to focus on the drivers behind that jump.

Strategic Growth Drivers: Product and Market Expansion

Westwood Holdings Group, Inc.'s near-term growth is tied directly to their product innovations, which are expanding their addressable market beyond traditional institutional money management. The firm is defintely leaning into the high-growth ETF space, which provides broader distribution and access to retail and intermediary channels.

• ETF Platform Expansion: They launched 11 Defined Volatility sector ETFs through their partnership with WEBs. This is a massive product breadth expansion.
• Flagship ETF Momentum: The Westwood Salient Enhanced Midstream Income ETF (MDST) reached $150 million in assets under management (AUM) in Q3 2025, capturing a significant 30% of September's midstream ETF flows. That's real market traction.
• Institutional Mandates: The institutional channel secured a nearly $1 billion sub-advisory mandate in their Small Cap Value strategy in Q1 2025, proving their core competency still attracts large capital.

The company is also targeting growth in their wealth management services, which provides a more stable, fee-based revenue stream to balance the volatility of institutional flows.

Competitive Advantages and Earnings Outlook

Their competitive edge isn't just about launching new products; it's about what they launch. Westwood Holdings Group, Inc. focuses on a differentiated multi-asset approach with a strong emphasis on downside risk mitigation, which is highly attractive in today's volatile market environment. The CEO noted that the market's shift away from the 'Magnificent Seven' and toward value-oriented investment plays directly benefits their core investment philosophy.

What this estimate hides is the lack of formal full-year 2025 guidance, but based on the Q3 2025 diluted EPS of $0.41 and Non-GAAP Economic Earnings of $0.64 per share, the run-rate profitability is significantly higher than earlier in the year. The firm's inclusion in the Russell 2000 Index also enhances their institutional accessibility, which should support future AUM inflows.

The firm's financial health is underpinned by a strong balance sheet, holding $39.2 million in cash and liquid investments as of Q3 2025, and importantly, carrying no debt.

To understand the foundation of their strategy, you should review their core principles: Mission Statement, Vision, & Core Values of Westwood Holdings Group, Inc. (WHG).

The consensus analyst price target is currently $18.00 with a 'Hold' rating, which suggests the market is waiting to see if the recent profit surge can be converted into sustained AUM growth through their new product lines. Your action now is to monitor the net flows into the new ETF suite and the institutional channel; that's the clearest signal of future revenue growth.