GROW

We rate U S GLOBAL INVESTORS INC (GROW) as a Reduce with a composite score of 49.3/100 at a current price of $3.39. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in momentum (74th percentile) and stability (47th percentile), which together account for the majority of the composite score. Offsetting weakness in value (21th percentile) and quality (35th percentile) tempers our overall conviction. We assign a No Moat rating (22/100), Low uncertainty, and Standard capital allocation.

Key items to watch: whether strong momentum is fundamentally supported by revenue trends; valuation compression risk if growth disappoints. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

U S GLOBAL INVESTORS INC holds a top-quartile position (#0 of 50) within the Finance, Insurance, And Real Estate sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 49.3/100 places it at rank #2108 in our full 7,333-stock universe. At $30M in market capitalization, U S GLOBAL INVESTORS INC is a small-cap player in the Finance, Insurance, And Real Estate space, which limits certain scale advantages but may allow for more agile strategic execution.

Despite positive momentum (74th percentile), revenue contraction of -3% creates a divergence between price action and fundamental trajectory. This divergence suggests either that the market is looking through near-term weakness or that technical factors are temporarily inflating the stock. Investors should assess whether the revenue decline reflects cyclical weakness or structural challenges.

The margin cascade tells an important story: gross margins of 47% (-29.0pp vs sector) narrow to operating margins of -24% (-40.7pp vs sector) and net margins of 7.4%, yielding a gross-to-net conversion rate of 16%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.

At a current price of $3.39, U S GLOBAL INVESTORS INC is trading at a premium to fundamental value. Our value factor score of 21/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The premium valuation implies the market is pricing in significant future growth or quality improvements that are not yet fully reflected in current fundamentals.

The stock currently trades at a P/E of 70.2x (a 488% premium to the sector median of 11.9x), P/B of 0.9x, P/S of 4.6x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis finds only partially justified by current fundamentals.

We assign a Low uncertainty rating to U S GLOBAL INVESTORS INC. The company exhibits strong financial stability with a beta of 0.44, conservative leverage (7% D/E), and a stability factor in the 47th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

Specific risk factors that inform our assessment include: low beta of 0.44 — while defensive, this may indicate limited upside participation in bull markets; elevated valuation multiple (P/E 70.2x) that leaves limited margin for error. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 47th percentile and quality factor at the 35th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 47% provide a buffer against cost pressures; conservative leverage (7% D/E) limits balance sheet risk; a 3.29% dividend yield anchors total return. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate U S GLOBAL INVESTORS INC's capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 1.3%, and the balance sheet is managed within acceptable parameters (D/E: 7%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; U S GLOBAL INVESTORS INC falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. The 3.29% dividend yield provides some income return, but the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, U S GLOBAL INVESTORS INC receives a Reduce rating with a composite score of 49.3/100 (rank #2108 of 7,333). Our quantitative framework assigns a No Moat (22/100, trend: stable), Low uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 44/100.

Our analysis does not support a constructive view on U S GLOBAL INVESTORS INC at this time. The combination of limited competitive advantages, low uncertainty, and standard capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.