SIEBERT FINANCIAL CORP (SIEB) stock intrinsic value fair value estimate & owner earnings analysis

Siebert Financial owns Muriel Siebert & Co., a small self-clearing U.S. broker-dealer headquartered in Miami Beach with 13 branch offices and about 176,000 retail accounts, plus an investment adviser, a new investment banking desk, a small media, sports and entertainment unit, and early-stage tokenized-securities projects. Of 2025 financial-services revenue of $93.0 million, the largest pieces were stock borrow/stock loan ($29.0 million), interest, marketing and distribution fees that are earned mostly on customer cash and move with short-term interest rates ($27.6 million), principal transactions ($17.5 million) and commissions ($8.9 million). How we measured earnings. A broker's reported operating cash flow swings by tens or hundreds of millions of dollars a year with customer balances and securities lending, so we stripped all of those balance-sheet movements out and measured cash earnings as net income plus non-cash charges (depreciation, deferred taxes, impairments), minus stock-based pay and the capital spending needed to keep the business running. Two judgements mattered: the $6.8 million purchase of the Miami office building in 2021 was treated as a one-time property purchase rather than an ongoing cost, and the $4.5 million fee owed to Kakaopay after their planned 2023 transaction was terminated was treated as non-recurring; it is being paid in cash from 2024 to 2026, and the roughly $1 million still owed is deducted from our values. On that basis, owner earnings per share were $0.16 in 2020, $0.23 in 2021, about zero in 2022, $0.36 in 2023, $0.28 in 2024 and $0.16 in 2025 (2025 includes a one-off gain of about $2.4 million on a private-placement stock that was bought and sold within the year). The median across 2020 to 2025, a period that spans near-zero rates, the 2022-2023 rate rise and the 2025 cuts, is about $0.20 per share. Results have since weakened for four straight quarters: second-half 2025 net income was only $1.2 million and the first half of 2026 was a $2.3 million loss, as staff costs rose (employee compensation went from $44.0 million in 2024 to $57.5 million in 2025), income on customer cash fell with rate cuts, the media unit lost $2.9 million in the first half of 2026 including impairments, and a $1.5 million arbitration settlement was booked. Because that weakness has persisted for a year rather than a single quarter, we use $0.16 per share (the 2020 and 2025 level, roughly $6.6 million a year) as the sustainable level rather than $0.20. Owner earnings fell 45% in 2025, and our base case assumes a further drop for the coming year, so it does not assume an immediate rebound. Base case, about $1.64 per share: the next twelve months earn about $0.06 per share while the larger cost base is absorbed, $0.12 in the following year, then $0.16 per share held flat through year 15. Second-quarter 2026 revenue of $31.2 million (stock loan $10.8 million, investment banking $2.4 million) supports a return to the 2025 level, but no growth is credited: the new lines are unproven, and past growth came from acquisitions and an unusual interest-rate cycle rather than a repeatable process. After year 15, earnings fade to zero by year 25. The firm has operated since 1967 and its account base is stable, but its profit record (losses in 2014-2016 and 2022) is too uneven to assume permanence. Bear case, about $0.55 per share: losses continue for another year (about -$0.05 per share), the following year breaks even, and earnings then settle at only about $0.08 per share (roughly $3.3 million) as lower rates cut customer-cash income further, the new businesses keep losing money and investment write-offs recur, as they did in 2022 ($4.0 million impairment and a $0.7 million loss on a sale) and 2023 ($1.0 million). Earnings fade to zero by year 20. Bull case, about $3.25 per share: the businesses the firm is already building pay off. Securities lending keeps growing, investment banking repeats its 2026 pace, and the wealth-management team, which reached $3 million of monthly revenue in April 2026, keeps producing. Earnings go to $0.14 and then $0.22 per share, then $0.28 per share (about $11.5 million, roughly the 2024 level in dollars) held through year 18, and fade to zero by year 30. Debt and capital. For a broker, borrowing funds customer activity, so we value earnings after interest and do not subtract that borrowing. Beyond its customer-related balances, the company owes a $4.1 million mortgage on its Miami building at 3.6%, about $5.0 million drawn at June 30, 2026 on its East West Bank revolver (which charges at least 7.5%) and roughly $1 million of the remaining Kakaopay fee, which is the only item we deduct. The main financial risk is lender covenants. The BMO credit agreement, renewed until November 20, 2026, requires the broker-dealer to keep $45 million of total regulatory capital and $20 million of excess net capital, and the East West Bank agreement requires $43 million of net capital and 1.35x debt-service coverage. Net capital was $61.7 million at the end of 2025 and about $47 million at June 30, 2026 according to the company's quarterly report, so the cushion is now thin. A breach or a failed renewal could force a share issue or a cutback in securities lending, and our bear case reflects that kind of outcome. Book equity is $88.7 million (about $2.16 per share). Our base value sits below book because the return the company has earned on that capital has been low and uneven. What would make this wrong: on the upside, the second-quarter 2026 revenue jump turning into profits, with costs held flat. On the downside, further rate cuts, continued losses in the media and other new businesses, or covenant pressure forcing dilution. Note that the most recent quarterly cash-flow details could not be checked line by line against our full-year method, so the 2026 figures above are drawn from reported net income and the company's own disclosures.