RAND

We rate RAND CAPITAL CORP (RAND) as Avoid with a composite score of 35.7/100 at a current price of $11.33. The stock falls in the bottom quintile of our universe across key quantitative factors, and the multi-factor weakness suggests a high probability of continued underperformance.

The rating is primarily driven by strength in value (63th percentile) and quality (40th percentile), which together account for the majority of the composite score. Offsetting weakness in momentum (5th percentile) and stability (28th percentile) tempers our overall conviction. We assign a No Moat rating (36/100), Medium uncertainty, and Standard capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs. 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.

RAND CAPITAL CORP holds a lower-quartile position (#30 of 38) within the Financial sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 35.7/100 places it at rank #4036 in our full 7,333-stock universe. At $43M in market capitalization, RAND CAPITAL CORP is a small-cap player in the Financial space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue contraction of -91% combined with momentum at the 5th percentile paints a cautious picture of the near-term business outlook. The market appears to be pricing in continued challenges, and a catalyst for reversal is not clearly visible from current data.

The margin cascade tells an important story: gross margins of 200% (+100.0pp vs sector) narrow to operating margins of 8% (-51.3pp vs sector) and net margins of 46.8%, yielding a gross-to-net conversion rate of 23%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.

At a current price of $11.33, RAND CAPITAL CORP is trading near fair value based on current fundamentals. Our value factor score of 63/100 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. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at EV/EBITDA of 21.1x (at a premium), P/B of 0.6x, P/S of 8.3x. We evaluate these multiples in the context of both absolute levels and sector-relative positioning to form our valuation view.

We assign a Medium uncertainty rating to RAND CAPITAL CORP. The stock presents a balanced risk profile: below-average price stability (28th percentile) and low beta of 0.16 — while defensive, this may indicate limited upside participation in bull markets. While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: below-average price stability (28th percentile); low beta of 0.16 — while defensive, this may indicate limited upside participation in bull markets. 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 28th percentile and quality factor at the 40th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 200% provide a buffer against cost pressures; conservative leverage (2% D/E) limits balance sheet risk; a 6.00% 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 RAND CAPITAL CORP's capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at -12.1%, and the balance sheet is managed within acceptable parameters (D/E: 2%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; RAND CAPITAL CORP falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. The 6.00% 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, RAND CAPITAL CORP receives a Avoid rating with a composite score of 35.7/100 (rank #4036 of 7,333). Our quantitative framework assigns a No Moat (36/100, trend: stable), Medium uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 34/100.

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