Executive Summary
Rating: HOLD | UTF
UTF offers a mixed setup: valuation is undemanding on earnings at 6.8x trailing P/E, but cash generation remains weak with operating cash flow of -435.5M TTM and levered free cash flow of 31.9M TTM. The key strength is profitability, with a 73.5% TTM operating margin and 14.8% TTM return on equity. The main risk is balance-sheet flexibility, as total debt/equity stands at 42.3% and the current ratio is 0.0. The near-term catalyst is improved cash conversion, which would make the current multiple easier to defend.
Investment Rating
Rating: HOLD
UTF trades at 29.0x EV/revenue and 6.8x trailing P/E despite TTM operating cash flow of -435.5M and only 31.9M of levered free cash flow. The current ratio is 0.0 and total debt is 1,210.0M, so liquidity remains the main constraint. The stock can work if cash conversion improves, but the present setup does not yet support a more constructive rating.
Company Profile
UTF is a closed-end fund in the utility-income space, with a portfolio positioned around income generation rather than operating growth. Its reported financial profile reflects that mandate: revenue TTM is 145.8M, operating margin is 73.5%, and return on equity is 14.8%. The company’s market capitalization is 3,028.9M and enterprise value is 4,221.7M, indicating that investors are paying a premium for the income stream and the associated asset base.
Economic Moat
Business Model
UTF’s competitive position is built around portfolio construction and income generation, not product differentiation. The business model depends on maintaining a mix of assets that can support recurring cash distributions and preserve net asset value through market cycles. That structure can create a durable franchise if management sustains disciplined allocation and avoids excessive leverage.
Risk Factors
A high-severity risk is leverage and liquidity. Total debt/equity is 42.3%, the current ratio is 0.0, and total debt is 1,210.0M, leaving limited room for balance-sheet stress. Operating cash flow is -435.5M TTM, so the fund is not currently self-funding from operations.
A medium-severity risk is valuation compression. UTF trades at 20.8x price/sales and 29.0x EV/revenue, which leaves limited margin for error if cash conversion weakens or income expectations reset.
A medium-severity risk is return dispersion versus peers. UTF’s 14.8% ROE is below UTG’s 24.1% and CSQ’s 23.5%, suggesting the portfolio is generating acceptable but not best-in-class equity returns.
Management Discussion & Analysis
Management’s profile suggests a focus on maintaining income generation while managing the capital structure conservatively enough to preserve flexibility. The key signal from the numbers is that leverage is being carried alongside negative operating cash flow, so capital allocation discipline matters more than aggressive expansion. Investors should watch whether management prioritizes deleveraging, distribution stability, or portfolio repositioning.
Recent Earnings
The most recent TTM profile shows strong operating profitability but weak cash conversion. UTF’s 73.5% operating margin is high, yet operating cash flow remains -435.5M TTM. The Q [UNVERIFIED — not in provided tables] swing in cash generation has no clear driver identified; investors should seek further disclosure. The gap between accounting profitability and cash flow suggests working-capital or portfolio-level timing effects rather than a simple margin issue.
Financial Analysis
Growth
UTF’s revenue TTM is 145.8M, below DNP’s 161.7M and above UTG’s 93.3M, CSQ’s 79.9M, and KYN’s 99.4M. On earnings, diluted EPS TTM is 4.0, versus UTG at 8.6, DNP at 1.2, CSQ at 4.5, and KYN at -0.3. The profile is stable rather than high-growth, with earnings quality more important than top-line expansion.
Profitability
UTF — Profitability (TTM)
Source: Yahoo Finance — Trailing Twelve Months (TTM)
| Metric | TTM |
|---|---|
| Operating Margin (TTM) | 73.5% |
| Net Margin (TTM) | 263.0% |
| Return on Assets (TTM) | 1.9% |
| Return on Equity (TTM) | 14.8% |
UTF’s TTM operating margin is 73.5%, net margin is 263.0%, return on assets is 1.9%, and return on equity is 14.8%. Versus peers, UTF’s operating margin is above UTG at 65.9%, DNP at 80.8%, CSQ at 41.7%, and KYN at 50.3%, while its ROE trails UTG at 24.1% and CSQ at 23.5%. The standout is net margin, which is materially elevated at 263.0%, indicating strong non-operating contribution to earnings.
Valuation
UTF — Valuation Multiples
Source: Yahoo Finance
| Metric | Value |
|---|---|
| Market Cap (USD Mil) | 3,028.935 |
| Enterprise Value (USD Mil) | 4,221.688 |
| Trailing P/E | 6.841 |
| Forward P/E | — |
| Price/Sales (TTM) | 20.776 |
| Price/Book (mrq) | 1.058 |
| EV/Revenue | 28.957 |
| EV/EBITDA | — |
| Beta (5Y Monthly) | 0.786 |
UTF trades at 6.8x trailing P/E, 20.8x price/sales, 1.1x price/book, and 29.0x EV/revenue. That compares with UTG at 4.6x P/E and 38.9x price/sales, DNP at 9.3x P/E and 25.1x price/sales, CSQ at 4.4x P/E and 39.5x price/sales, and KYN at 4.9x forward P/E and 24.1x price/sales. UTF screens as neither the cheapest nor the most expensive name in the group, but the sales multiple is high relative to its cash-flow profile.
Leverage
UTF — Leverage & Coverage (Quarterly)
Source: Yahoo Finance — Quarterly Financial Statements
| Metric | Value |
|---|---|
| Total Debt/Equity % (mrq) | 42.270 |
| Current Ratio (mrq) | 0.023 |
| Total Debt (mrq, USD Mil) | 1,210.000 |
| Operating Cash Flow (TTM, USD Mil) | -435.544 |
| Levered Free Cash Flow (TTM, USD Mil) | 31.890 |
UTF’s total debt/equity is 42.3%, above UTG at 24.8%, DNP at 31.6%, and KYN at 22.1%, and slightly above CSQ at 41.1%. Total debt is 1,210.0M, operating cash flow is -435.5M TTM, and levered free cash flow is 31.9M TTM. The current ratio of 0.0 underscores limited near-term liquidity, making cash conversion the key balance-sheet variable.
Comparable Analysis
UTF’s 145.8M of TTM revenue is larger than UTG’s 93.3M, CSQ’s 79.9M, and KYN’s 99.4M, but below DNP’s 161.7M. On profitability, UTF’s 73.5% operating margin is competitive, though its 14.8% ROE trails UTG at 24.1% and CSQ at 23.5%. On leverage, UTF’s 42.3% debt/equity is higher than UTG, DNP, and KYN, and roughly in line with CSQ. Valuation is mixed: UTF’s 6.8x P/E is above UTG and CSQ, but its 20.8x price/sales is lower than UTG and CSQ and below DNP’s 25.1x.
Growth
| Company | Revenue TTM (USD Mil) | Revenue Growth YoY % | EBITDA TTM (USD Mil) | Diluted EPS TTM |
|---|---|---|---|---|
| UTF | 145.790 | — | — | 3.960 |
| UTG | 93.290 | -5.6% | — | 8.570 |
| DNP | 161.690 | 8.9% | — | 1.160 |
| CSQ | 79.900 | -2.2% | — | 4.510 |
| KYN | 99.350 | 8.5% | — | -0.280 |
| SREA | — | — | — | — |
Valuation
| Company | Trailing P/E | Forward P/E | EV/Revenue | EV/EBITDA | Price/Sales (TTM) | Price/Book (mrq) | Market Cap (USD Mil) | Enterprise Value (USD Mil) | Beta (5Y Monthly) |
|---|---|---|---|---|---|---|---|---|---|
| UTF | 6.841 | — | 28.957 | — | 20.776 | 1.058 | 3,028.940 | 4,221.690 | 0.786 |
| UTG | 4.628 | — | — | — | 38.868 | 1.021 | 3,626.040 | — | 0.856 |
| DNP | 9.285 | — | 31.630 | — | 25.102 | 1.157 | 4,058.780 | 5,114.230 | 0.342 |
| CSQ | 4.360 | — | — | — | 39.471 | 0.944 | 3,153.510 | — | 1.311 |
| KYN | — | 4.913 | 29.621 | — | 24.088 | 0.890 | 2,393.120 | 2,942.790 | 0.652 |
| SREA | — | — | — | — | — | — | — | — | — |
Profitability
| Company | Operating Margin (TTM) | Net Margin (TTM) | Return on Assets (TTM) | Return on Equity (TTM) |
|---|---|---|---|---|
| UTF | 73.5% | 263.0% | 1.9% | 14.8% |
| UTG | 65.9% | 824.5% | 1.0% | 24.1% |
| DNP | 80.8% | 266.3% | 1.8% | 12.7% |
| CSQ | 41.7% | 903.4% | 0.5% | 23.5% |
| KYN | 50.3% | 386.8% | 0.9% | 14.9% |
| SREA | — | — | — | — |
Leverage
| Company | Total Debt/Equity % (mrq) | Current Ratio (mrq) | Total Debt (mrq, USD Mil) | Operating Cash Flow TTM (USD Mil) | Free Cash Flow TTM (USD Mil) |
|---|---|---|---|---|---|
| UTF | 42.270 | 0.023 | 1,210.000 | -435.540 | 31.890 |
| UTG | 24.835 | 0.012 | 875.000 | -114.490 | 13.640 |
| DNP | 31.582 | 1.324 | 1,104.680 | 235.880 | 64.130 |
| CSQ | 41.078 | 3.591 | 1,371.910 | — | — |
| KYN | 22.121 | 0.090 | 594.740 | 223.370 | 2.640 |
| SREA | — | — | — | — | — |
Returns
| Company | Return on Equity (TTM) | Return on Assets (TTM) |
|---|---|---|
| UTF | 14.8% | 1.9% |
| UTG | 24.1% | 1.0% |
| DNP | 12.7% | 1.8% |
| CSQ | 23.5% | 0.5% |
| KYN | 14.9% | 0.9% |
| SREA | — | — |
Source: Yahoo Finance
Conclusion
UTF is a profitable but cash-constrained income vehicle. The valuation is not demanding on earnings, but the combination of -435.5M TTM operating cash flow, 1,210.0M of debt, and a 0.0 current ratio limits the margin of safety. The investment case depends on whether management can convert strong accounting margins into durable cash generation. If that happens, the current multiple is defensible; if not, the stock remains vulnerable to a rerating.
Data sourced from Yahoo Finance. Not investment advice.
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